Hatchet Job - The City

Hatchet Job - The City Pages, predictably, sounds off on the "Telegate" "Scandal", in a team report led by überliberal Steve Perry.

The story is an exercise in polemic masquerading as journalism. It starts in the lede:

Call him Babyface. Even Tim Pawlenty's political foes are prone to leavening their criticisms with testaments to what a personable guy he is. The quality is an asset to any politician, but it's especially useful to one with Pawlenty's slash-and-burn fiscal politics. If you conjure the names of other Midwestern governors who have pushed similar spending devolutions--Wisconsin's Tommy Thompson, Michigan's John Engler--you notice that most are polarizing figures with a reputation for public mean-spiritedness.

The "reputation" is cooked up entirely by people like Perry, for whom failure to scrape at the altar of statism is a functional definition of "mean-spirited".

One reason nice-guy politicians like Pawlenty fare so well is that people naturally assume they possess the other attributes we associate with nice people, such as fairness, guilelessness (relatively speaking; they needn't be Pollyannas, but they can't be inveterate schemers either), and a habit of treating others as they would like to be treated--in other words, of holding themselves to the same standards of conduct as everybody else.

Perry's article then goes on to abjectly fail to show us why Pawlenty is not any of these things.

Here's where Perry's frequently-excellent journalistic chops desert him:

Clearly none of this applies in Pawlenty's case, unless you take the governor's doe-eyed account of his current troubles at face value. We are asked to believe that he a) served actively and responsibly as a board officer for a telecom holding company, earning stock that he eventually cashed in for $10,000, yet never knew a thing about the questionable marketing habits of a key subsidiary; and b) gave no thought to concealment when he set up the functional equivalent of a blind shell company to receive tens of thousands of dollars in payments from a pal and telecom associate during his 2002 run for governor.

Two responses to this:

1. Board members do not, generally, get involved in the day to day operations of a company. They pick the officers that do the mucking about in the trenches. If problems in the day to day operations start mangling the bottom line, the board steps in and "inspires", or if necessary changes, the executive suite. A good board picks a good president, and then gets out of the way - while watching carefully.
2. The "blind shell company" is fairly common practice among independent contractors - for liability as well as tax reasons. I'm not surprised most Democrats - who tend to work in government service or for large nanny-companies - don't know this. But it's rather important.

Perry continues:

Pawlenty's flair for political calculation under pressure has never been more evident than on the Tuesday after the first Pioneer Press story broke. He spent an astonishing two hours talking to the press about allegations that a telecom whose board he'd served on was guilty of shady business practices; his manner was humble, though he never exactly stopped talking like a lawyer. "I don't want to say I wasn't responsible," he hedged. "All I want to say are the facts. Should I have known? If the answer is yes, then I am responsible, no question about it." If the governor balks, you must let him walk!

In the Perry world, giving the right answer (especially when one is a lawyer by trade and training) is apparently incriminating evidence.

During the session, Pawlenty offered an additional, oh by the way disclosure: He had also received large payments from his friend, political ally, and telecom associate Elam Baer during Pawlenty's run for governor last year. These fees (or not) were said to total considerably more than he earned as a legislator, yet the arrangement was never publicly disclosed. Moreover, he conceded, he could not really account for any specific legal projects he had worked on.

This, say sources close to the story, may be the only part where Pawlenty's behavior might step outside any rules - but only with the Lawyers' Board of Professional Responsibilty. Not that that

The governor only wanted to come clean about his associations with the Baer circle, he implied--though he had obviously felt no need to disclose any aspect of them before the shit hit the fan.

Perry fails to show us where there was any legal imperative to explicity disclose anything. Apparently Pawlenty is, alone among all politicians, supposed to provide

When the press sit-down was over, no one in attendance commented in writing on the mastery of what Pawlenty had done: He had used the occasion of a minor scandal to let the air out of a potentially major one. Public opinion usually does not look kindly upon undisclosed financial relationships between politically connected businesses and politicians who seem to have done no demonstrable work for their money.

Especially if the "disclosure rules" are made up from the whole cloth by a press that is hostile to a certain party.

So far the gambit is working reasonably well.

Ah, the old "The truth is duller than the fiction" gambit. Brilliant stroke, Governor!

Pawlenty's preemptive disclosure was hardly brilliant in one sense. Lots of nine-year-olds have already figured out there's less trouble if you 'fess up in toto when you're caught. But it was both shrewd and bold by the lights of contemporary political practice, which typically dictates more lies and stonewalling in the hope that people will get bored and forget about the whole mess. And they always do. Seen from that angle, maybe there is a bit of genius in Pawlenty's approach--by his Tuesday revelation, he slipped a real live baby into the tepid bathwater of the board membership scandal. And now, barring fresh disclosures, all he has to do is wait for it to be thrown out. The DFL has already indicated through its silence that it won't be pursuing the affair seriously (see Robson, What Hearings? What Scandal?).

Perhaps because, like with the American Bankers "scandal", if you dig far enough under the surface, all the "wrong" names pop up?

Perry now starts to wax indignant:

The Friends of Tim are right when they claim that their actions are garden-variety stuff. The real outrage is the political culture in which they are garden-variety stuff. Friends-gate is one of the better glimpses we have had of the workaday connections between business and politics--the fruits of what Pawlenty calls "networking"--since former Senator Bob Packwood's diaries were pried loose by congressional subpoena in 1995.

Everywhere you look in this saga you see friends helping friends--which is to say, insiders helping themselves, and with nothing resembling the openness and probity they expect commoners to display in their daily affairs.

So, again, Steve Perry, what was wrong?

That Pawlenty incorporated his relationship with NewTel? Every indy worth his or her weight in incorporation documents does that.

Not reporting the legal consulting according to LBPR rules? Well, then let's call this a "lawyerly rules violation" and cut the crap, shall we?

The Pawlenty crowd, after all, consists of legendarily tough-minded, fiscally responsible, pay-as-you- go people, avatars of the philosophy of government that says a man never stands so tall as when he stoops to collect co-payments from a single mother. There are no safety nets in Pawlenty's ideal world, except for the ones that people of goodwill and means construct for each other on an informal and largely surreptitious basis.

And in Steve Perry's world, there are no gradations to the right of, say, Paul Wellstone; beyond that point, there be only dragons.

Now, Perry slips into social critic mode:

And while we are on the subject of rectitude and hypocrisy, a few words about the FOT's chosen industry. Elam Baer, the telecom entrepreneur at the center of it all, told reporters that he entered the field because it represented a "great business opportunity." What sort of opportunity, exactly?

Small outfits like the NewTel companies are purely marketing operations. They buy long-distance capacity (time on phone lines, that is) from large carriers and scramble to resell it to consumers, the theory being that their low overhead costs then allow them to undercut the big guys' rates and thrive through the open market. In practice, though, the telecom business is full of small-time, often transient operators with the same idea. The resulting competitive climate is one in which the surest way to get ahead fast is to hustle customers through some version of the technique known as slamming, which involves the use of telemarketers to switch consumer accounts to your service with deceptively obtained consent or none at all. Originally it was the big companies, not the little ones, that pioneered the practice, but now it is most notoriously the province of the minor players. As Pawlenty partisans have pointed out, a great many small telecoms have complaint records as bad or worse.

This is the business culture into which Pawlenty and his circle happily waded, and in a certain sense they did thrive there. Carlene Hughes, a Washington state utilities investigator, told the Pi-Press: "New Access seems to be good at slamming and seems to be good at doing it for a long time--and then moving on when the states catch up with them." Another company that Baer co-founded with Vicki Grunseth, QAI, was the subject of similar claims. Following the early 1997 raid by Wisconsin officials of a firm connected to QAI, state investigators wrote, "Clearly, a pattern of misrepresentations and deception is being used by QAI Inc. to induce prospective customers into ordering their service." Later that year Baer and Grunseth sold out their interest in QAI, and subsequently launched NewTel.

News flash; telecom is a sleazy business. Stop the presses.

So show us where Pawlenty either did anything illegal, or anything unethical as a board chairman.

Now, he starts to get into familiar territory:

Fast forward. The brightest star in this little constellation runs for governor in 2002 with financial assistance from one of the others. This seeming campaign contribution--and why not think of it as such? the governor reasserted through a flack in last Saturday's Pi-Press that he would not release evidence of any actual work he did for the money--goes undisclosed until other details surface regarding Tim Pawlenty's connections to Elam Baer.

Pawlenty wins the election and appoints a man recommended by Baer, a US Bank mortgage executive named Glenn Wilson, to head the Commerce Department. Wilson in turn hires another FOT, gubernatorial campaign manager Tim Commers, whose résumé includes marketing directorship of the oft-criticized QAI and an episode in which he was sued for allegedly running a telemarketing operation that misrepresented his anti-abortion group as another, better known one. When this old news comes to light, Commers resigns, adding that he has never done a single improper thing. "Why should I put myself through this when I can go back to the private sector?" he demands. Indeed.

Commers is a bit player.

But mostly the Friends of Tim prosper. Pat Awada, who owned the verifications company charged with making sure New Access didn't engage in slamming, moves on to greater things as well. Her membership in the Pawlenty circle helps her gain the Republican nomination for state auditor. She sells her company to one of NewTel's co-founders, David Buss, and gets paid partly in NewTel stock. Because she now occupies the auditor post and is charged with keeping an eye on state finances, she is the most shrill of the FOT after the story breaks, even going so far as to claim a success rate of 99.9 percent in her New Access endeavors.

And...Steve? Was that claim false?

I think it's fairly safe to call this ridiculous on its face. In consumer affairs, especially those involving the murky world of telemarketing, typically only a small fraction of the wronged even know where to turn to complain, and a smaller fraction still actually bothers.

So...you think it's ridiculous, based on your assumptions - but you reall don't know?

Just checking.

There is no facet of all this that doesn't stink. Also none that really violates the evolving norms of Banana Republican governance--a phenomenon hardly restricted to Republicans, we should note, though they do own most of the playing field now.

Mr. Perry - if it's "hardly restricted to Republicans", then why is the City Pages - which prides itself on journalistic prowess - only now getting to the story?

Just a coincidence, I'm sure.

Posted by Mitch at July 28, 2003 11:10 AM