By MIKE McINTIRE © 2008 New York Times News Service As Sen. John McCain waited to speak at the annual awards dinner of the International...


© 2008 New York Times News Service

As Sen. John McCain waited to speak at the annual awards dinner of the International Republican Institute, a democracy-building group he has led for 15 years, lobbyists and business executives dominated the stage at a Washington hotel ballroom.

First up that night in September 2006 was the institute’s vice chairman, Peter T. Madigan, a McCain campaign fundraiser and lobbyist whose clients span the globe, from Dubai to Colombia. He thanked Timothy P. McKone, an AT&T lobbyist and McCain fundraiser, for helping with the dinner arrangements and then introduced the chairman of AT&T, Edward E. Whitacre Jr., whose company had donated $200,000 for the event.

AT&T at the time was seeking political support for an $80 billion merger with BellSouth – another Madigan client – and Whitacre lavished praise on McCain, a senior member of the Senate Commerce Committee. When McCain finally took the podium, he expressed “profound thanks” to AT&T before presenting the institute’s Freedom Award to the president of Liberia, a lobbying client of Charlie Black, an institute donor and McCain campaign adviser.

The parade of lobbyists and fundraisers at the dinner is emblematic of McCain’s tenure at the institute, one of a pair of nonprofit groups – taxpayer-financed and each allied with one of the two major political parties – that were created during the Reagan era to promote democracy in closed societies.

Over the years, McCain has nurtured a reputation for bucking the Republican establishment and criticizing the influence of special interests in politics. But an examination of his leadership of the Republican institute – one of the least-chronicled aspects of his political life – reveals an organization in many ways at odds with the political outsider image that has become a touchstone of the McCain campaign for president.

Certainly the institute’s mission is in keeping with McCain’s full-throated support for exporting American democratic values. Yet the institute is also something of a revolving door for lobbyists and out-of-power Republicans that offers big donors a way of helping both the party and the institute’s chairman, who is the only sitting member of Congress – and now candidate for president – ever to head one of the democracy groups.

Operating without the sort of limits placed on campaign fundraising, the institute under McCain has solicited millions of dollars for its operations from some 560 defense contractors, lobbying firms, oil companies and other corporations, many with issues before Senate committees McCain was on. Recently, he has drawn criticism for involving lobbyists in his presidential campaign; under McCain, 14 of them have served on the institute’s board, some representing governments or organizations in countries where the group was carrying out programs.

These are sensitive issues for McCain, who as a champion of campaign finance and lobbying reforms has made a point of eschewing unlimited “soft money” contributions to his political committees. During his Senate investigation of the lobbyist Jack Abramoff, McCain highlighted the risks of business interests’ use of donations to nonprofit organizations as another way to gain access to a member of Congress.

Beyond rubbing shoulders with contributors, McCain could use the chairman’s perch to score points with important Republican figures – he presented Freedom Awards to President Bush, former Secretary of State Colin L. Powell and, in 2003, the incoming Senate majority leader, Bill Frist. At least seven board members have been involved in his presidential campaign, along with the institute’s president, Lorne W. Craner, a former Senate aide whose father was in the same Hanoi prison as McCain.

McCain declined to be interviewed for this article. Brian Rogers, a campaign spokesman, said the senator “has never requested nor offered to take a position on legislation in exchange for, or because of, contributions to IRI.” He added that McCain was “proud of IRI’s work in countries from Peru to Serbia to Mongolia.”

“In traveling overseas,” Rogers said, “Sen. McCain has repeatedly been complimented on IRI’s work by prime ministers and presidents, U.S. ambassadors and ordinary citizens. Many have told him that freedom in their country would not have been possible without IRI’s work.”

The institute’s work in some of those countries resonates with important ethnic voting blocs at home.

When McCain’s Democratic rival for president, Sen. Barack Obama, traveled to Miami in May to address Cuban-Americans, Republicans circulated a memorandum to reporters that quoted an anti-Castro group criticizing Obama’s willingness to talk to Cuba’s communist leaders. Not mentioned was that the group, the Cuban Democratic Directorate, was financed for years by the International Republican Institute – it got more than $8 million during McCain’s tenure. Though the directorate does not endorse candidates, its leaders are effusive in praising McCain.

“I want to stress that we are very thankful to Sen. McCain for everything he has done through IRI to support our cause,” said Janisset Rivero, joint national secretary of the directorate.

Shaken by the loss of the White House in 1992, Republicans scrambled to reinvigorate their party by giving higher profiles to some of its promising prospects. McCain, just re-elected by a convincing margin, was given two new positions: head of fundraising and recruiting for the Senate Republicans and chairman of the International Republican Institute.

Enlisting McCain, with his no-nonsense image, was a way to impose much-needed discipline at the institute. Party leaders had been hearing disturbing tales of mismanagement and questionable expenditures, such as Concorde flights for staff members and bottles of wine with a private IRI label.

McCain quickly put his stamp on the organization after taking over in January 1993. Within months, the board fired the institute’s president, Jack W. Buechner, a former Republican congressman from Missouri, and McCain announced plans to shift much of the institute’s focus from Latin America to the former Soviet bloc.

In an interview, Buechner characterized his dismissal as “less than gracious,” saying McCain did not call beforehand to discuss it. He attributed his ouster, in part, to a reluctance to give jobs and appointments to Republicans left adrift by the transition to a Democratic administration.

“The theory before I came aboard at the institute was you needed to reward the party faithful,” Buechner said. “The attitude was that IRI was supposed to be a repository for unemployed Bushies.”

Buechner’s assertions reflected criticism that has dogged the institute and its Democratic counterpart since their creation. While McCain was an early supporter, other members of Congress believed the groups were essentially partisan pork barrels. Former Sen. Hank Brown, a Colorado Republican who tried several times to kill federal financing for the institutes, still harbors doubts about them.

“I know John’s interest in it was very sincere, and he put a lot of time into promoting democracy himself,” Brown said. “But the reality is that politicians and well-heeled business leaders taking free trips abroad doesn’t bring democracy.”

Today, with a budget of about $78 million and 400 employees working in 70 countries, the Republican institute has grown in size and stature. Its recent work has included organizing debates for candidates in Iraq, conducting a rare public opinion poll in Cuba and training political parties in Belarus.

Yet while the institute says its activities are nonpartisan and peaceful, left-leaning groups have long accused it of improper meddling in pursuit of a neoconservative agenda. A former American ambassador to Haiti has asserted that institute operatives undermined reconciliation efforts among Haitian political rivals, contributing to a coup in 2004. Two years earlier, the institute was criticized after its president at the time, George A. Folsom, praised a coup attempt against Venezuela’s leftist president, Hugo Chavez.

Major staffing decisions and appointments are a board matter; as chairman, McCain has played a significant, often decisive, role. His early choices show an attempt to balance the demands of politics, professionalism and personal loyalty. Bucking party officials, McCain successfully pushed for R. Bruce McColm, a human rights expert who was not an active Republican, to replace Buechner. John Dowd, the senator’s personal lawyer in the Keating Five scandal during the savings-and-loan crisis, became the institute’s general counsel, and Craner became vice president.

In his autobiography, McCain wrote of his deep debt to Craner’s father, Lt. Col. Robert R. Craner, for his help in surviving imprisonment in North Vietnam, and when he was elected to the Senate in 1986, McCain hired the younger Craner as his legislative assistant. Before joining the institute, Craner also worked at the State Department and the National Security Council.

While McColm’s arrival seemed a departure from past partisan practices, he was gone within two years. (He did not respond to messages seeking comment for this article.) Former institute directors said McCain simply sent them a fax asking for approval to elevate Craner to the top job, which he has held since, except for three years at the Bush State Department.

McCain was also becoming increasingly involved in the institute’s finances. Arguing that the organization should wean itself from taxpayer dollars – its prime source of financing – he set about greatly expanding fundraising from the private sector. That initiative was in line with the institute’s goal of bringing the business community into efforts to spread democracy – and an environment conducive to capitalism – around the world.

Typical of his efforts was a May 1995 letter to an executive at Philip Morris asking for help in underwriting the institute’s Freedom Awards. The company agreed to give $25,000.

By the time McCain began his unsuccessful run for president in 2000, his time spent tending to the institute was yielding political dividends.

Jeane J. Kirkpatrick, the former ambassador to the United Nations and an institute board member, endorsed him, saying that working “under his leadership in the IRI” had convinced her of his foreign policy credentials. A number of major institute donors were also campaign contributors, and some institute directors volunteered as fundraisers.

That synergy reflects the ways in which the boundaries between the institute and McCain’s political activities and foreign policies have blurred over the years. If anything, the overlaps seem more pronounced in his latest quest for the presidency, and involve institute board members associated with his campaign and donors with interests before the Senate.

Madigan, the institute’s vice chairman and a McCain fundraiser, represented the government of El Salvador in 2004, at a time when the institute was monitoring presidential elections there. Madigan’s firm has represented six foreign governments and sometimes lobbied McCain’s Senate office.

Among those clients is the government of Colombia, which has paid the firm at least $590,000 over the last 18 months. One issue Madigan has been pushing on behalf of the Colombians is a pending free trade agreement with the United States. Several weeks ago, McCain traveled to Colombia and, in keeping with his views on trade, spoke about the need for the accord.

Another board member is the McCain campaign’s chief foreign policy adviser, Randy Scheunemann. Until March, he was registered as a lobbyist for several foreign governments, and he represented the government of Georgia last January when the institute sent election monitors there. Since joining the institute in 2004, Scheunemann has spoken with McCain or his Senate aides at least 42 times on behalf of his foreign lobbying clients, Justice Department records show.

Madigan did not respond to messages seeking comment. Scheunemann’s lobbying business, Orion Strategies, referred questions to the McCain campaign, which declined to make Scheunemann available.

In its responses to written questions, the campaign said that the presence of lobbyists on the institute board did not pose a conflict, and that Madigan and Scheunemann both “recused themselves from IRI decisions regarding the countries they represented.” The campaign also said donations to the institute had never been linked to McCain’s Senate activities.

But at least one donor apparently saw it differently – Philip Morris stopped giving to the institute after McCain began urging stronger tobacco regulation – and many had an interest in issues before Congress. For example, CTIA-The Wireless Association, a national lobbying group representing the cellular telephone industry, has been a consistent donor to the institute, and just as regularly had an interest in legislation McCain sponsored or shaped.

In 2003, when McCain’s commerce committee was considering legislation to regulate e-mail spam, wireless companies were worried it could cause problems if applied to spam text messages received on cell phones. The CTIA sent an update to its members noting that McCain had “raised the wireless-specific issues and pledged to work to resolve them,” and he eventually co-sponsored an amendment instructing regulators to study how best to apply the new rules to cellular devices.

By the time AT&T funded the 2006 institute awards dinner, McCain was no longer the committee chairman, but the firm’s merger with BellSouth, pending before the Federal Communications Commission, was of major interest in Congress, which has significant sway over the FCC. McCain rarely opposed telecom mergers, but he had raised questions about a previous AT&T merger, with MediaOne, during the 2000 presidential campaign and pledged to hold hearings on telecom industry consolidation. In 2006, however, McCain remained silent on the AT&T-BellSouth deal, which was eventually approved by the FCC.

Rogers, the campaign spokesman, said that McCain’s silence was in keeping with his practice of not commenting on mergers, and that his remarks about the earlier AT&T proposal were intended as a broad criticism of telecom legislation and not that specific merger. On the subject of CTIA, as Rogers pointed out, the group has opposed McCain on some legislation, and the senator’s amendment to the spam bill reflected a compromise after he objected to a more sweeping exemption sought by CTIA.

“Any suggestion that CTIA’s donations to IRI were somehow offered (and accepted) in exchange for Sen. McCain’s work on the Senate Commerce Committee is categorically false and baseless,” the spokesman said.

© The New York Times. All rights reserved. This article originally appeared in The New York Times.

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