Kirk, Duckworth raising big money from special interests

  • Tammy Duckworth hopes to unseat Mark Kirk in their U.S. Senate race.

    Tammy Duckworth hopes to unseat Mark Kirk in their U.S. Senate race.

 
By Chuck Neubauer and Sandy Bergo
Better Government Association
Updated 10/3/2016 4:15 PM

A New York billionaire whose hedge fund made an estimated $2 billion profit at the conclusion of a more than decadelong dispute with Argentina donated $250,000 to support Sen. Mark Kirk's re-election after Kirk's intervention on the businessman's behalf.

Kirk's opponent, U.S. Rep. Tammy Duckworth, received more than $125,000 from employees of a downstate law firm she helped by voting to protect its lucrative asbestos-injury business.

 

In both cases, the donations show how the candidates for the U.S. Senate in Illinois use their official positions to boost campaign donors' narrow agendas, according to public records and interviews.

The Kirk-Duckworth race also illustrates the growing influence of wealthy donors and corporations that take advantage of recent court rulings such as Citizens United to infuse political campaigns with unlimited money. A Better Government Association investigation analyzed candidate donor lists, super PAC records, and "dark money" organization expenditures to reveal a pattern of financial and ideological interest funding for both candidates. As of June 30, Kirk raised a total of $11.3 million and Duckworth $10.1 million, making theirs one of the most expensive Senate races this year. That total only accounts for funds raised by candidates themselves and does not include the millions raised and spent by outside groups.

"A lot of outside money is being spent on Senate races for control of the Senate -- Illinois is one of those states" drawing special interest money, said Sheila Krumholz, executive director of Washington-based Center for Responsive Politics.

The related court rulings, she said, allow groups "to raise unlimited donations from unlimited sources."

Duckworth and Kirk declined requests for interviews.

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Kirk's campaign also declined to answer specific questions about donations but said the Republican senator from Highland Park votes his conscience.

"Our campaign fully complies with the law ... we believe the voters of Illinois deserve a level playing field. Despite the overwhelming money of big labor and an array of special interests attempting to defeat Sen. Kirk, we are confident he will once again defy expectations and win in November," campaign spokeswoman Eleni Demertzis said.

Duckworth's campaign said the Democratic congresswoman from Hoffman Estates is concerned about the influence of large donations in elections.

"It's clear that money plays too large a role in our politics," said campaign spokesman Matt McGrath. "Citizens United gives out-of-state billionaires and corporations an unfair advantage over Illinoisans when it comes to electing our leaders."

Asbestos

The partners and employees of an Alton law firm make up one of the largest financial backers for Duckworth's Senate race, donating more than $125,000.

                                                                                                                                                                                                                       
 

Simmons Hanly Conroy LLC promotes itself as "one of the nation's largest mass tort law firms and a leading voice for victims of mesothelioma and asbestos exposure." Mesothelioma is a deadly respiratory disease caused by exposure to asbestos.

The firm boasts winning more than $5 billion for victims.

But Republicans, including Kirk, pushed to rein in asbestos awards by funneling claims through a federally administered court or office staffed by experts, replacing a system that Kirk has said is profitable for attorneys but isn't fair to victims.

More recently, Duckworth and other Democrats in Congress twice voted against Republican-backed bills that Perry Browder, a Simmons shareholder, says would "delay, and in some cases, deny justice and badly needed compensation to people suffering from asbestos-related diseases."

A spokesman for Duckworth said there was no connection between the Simmons donations and her votes and asserted that the candidate's position is intended to help veterans.

Since January 2015, Simmons law firm employees donated $638,490 to Democratic federal candidates.

The Simmons law firm did not respond to multiple requests for comment.

Argentina connection

Kirk donor Paul Singer, the New York billionaire and co-owner of Elliott Management, which manages hedge funds, was locked in the middle of a 13-year legal battle with Argentina over payments on defaulted bonds when the senator took his side. Kirk wrote a letter to then-U.S. Treasury Secretary Timothy Geithner, trying to apply pressure on the government of Argentina.

In 2001, around the time Argentina defaulted on its bonds, Singer and his hedge fund invested heavily in bonds originally worth $617 million upon maturity. At the time of Singer's investment, the bonds traded at a steep discount.

Later, Argentina offered to pay investors about 30 cents on the dollar, a price the vast majority of bondholders accepted. But Singer and a few other hedge funds said they wanted to be paid the full value of the bonds plus interest.

The holdout investors filed a flurry of lawsuits, winning favorable rulings in some. Singer used one judgment to get a court order to take possession of an Argentine Navy ship docked in Ghana.

Singer and the other holdouts also formed a lobbying organization, American Task Force Argentina, spending $7.8 million since 2007 to persuade Congress as well as the Obama administration to pressure Argentina to resolve its differences with the bondholders.

Singer also donated to Kirk's successful 2010 race and made another donation in 2014. The donations of $4,800 and $5,200 were the maximum direct-to-candidate contributions allowed by federal law at the time. Some of his employees gave as well.

In June 2011, Kirk intervened. He wrote Geithner urging him to instruct America's representative to the World Bank to suspend loans to Argentina until it paid the bondholders.

"Despite Argentina's failure to repay United States creditors in accordance with court judgments, Argentina has continued to receive loans from the World Bank," Kirk wrote.

American Task Force Argentina made the letter public and praised Kirk's actions, prompting Argentina's Ambassador to the U.S., Alfredo Chiaradia, to write Geithner, saying: "The letter from Senator Kirk is clearly part of a campaign by vulture funds attempting to discredit Argentina in order to further their 'raison d'être,' i.e. sovereign debt profiteering."

Finally, in December 2015, a newly elected president took office in Argentina and decided to negotiate with Singer and the other holdouts, paying the hedge funds $4.65 billion -- of that $2.4 billion going to Singer's fund. The payouts were 10 to 15 times what the hedge funds paid for the bonds, according to a Congressional Research Service report. The profit for Singer's fund was about $2 billion.

Around that time last December, Singer donated $100,000 to Independent Voice for Illinois, a super PAC supporting Kirk. Singer gave the PAC $150,000 more in June 2016.

A spokesman for Singer said the billionaire has a long record of supporting Republican and conservative candidates and causes. Donations to Kirk, he added, relate to Singer's policy interests such as maintaining Republican control of the Senate, same-sex marriage and foreign policy.

"Sen. Kirk has been a leader on national security, and he was one of the first Republican members of the U.S. Senate to support LGBT marriage equality, two areas that Mr. Singer cares deeply about," Elliott Management spokesman Michael O'Looney said.

He denied any connection between Singer's business interests and the donations, saying "dozens of members of Congress from both sides of the aisle spoke out against Argentina's conduct toward its creditors ... the majority of these members did not receive any campaign contributions from Mr. Singer."

Murray energy

In June 2015, Murray Energy Corp. donated $100,000 to the super PAC supporting Kirk 12 days after the senator cast a deciding vote that stalled an Environmental Protection Agency initiative to toughen rules on coal-fired power plants. The anti-environment vote was a departure for Kirk and a boon to Murray, the largest underground coal mining corporation, which had filed seven lawsuits against the EPA and its new rules.

Robert Murray's Ohio-based company is the largest coal producer in Illinois and has accused the Obama administration and "radical environmentalists" of trying to kill the coal industry.

Murray Energy is the largest corporate donor to Independent Voice for Illinois. A Murray spokesman said the company was proud to support Kirk as he worked to defend coal jobs and "reliable, low cost electricity for people on fixed incomes and our poor."

A few months after that donation, Kirk and fellow Republicans again sided with Murray, voting to roll back a federal environmental safeguard known as the Clean Water Rule. It did not pass.

Kirk later reverted to his pro-environment posture, more popular in Illinois, and joined Democrats in a vote that favored new power plant regulations.

A spokesman said the company was "disappointed" in that vote; "however, we have not discussed it with the senator." Nor, he said, had Murray Energy talked about the donation with Kirk.

Super PAC rules allow outside groups like the super PAC backing Kirk to collect unlimited donations as long as there is no coordination with the candidates they support.

If the candidate did call the shots, the super-funding would be a clear violation of the federal limits that still exist on direct contributions to candidates.

The pro-Kirk super PAC, Independent Voice for Illinois is run by Eric Elk, the Senator's former chief of staff who did not respond to questions. Duckworth does not have a super PAC.

Dark money

Of even more concern is the flow of so-called dark money because donors' names are kept secret.

Like super PACs, dark money organizations accept donations of any amount, including corporate money, but unlike super PACs, they are set up as nonprofits, which are not required to reveal donors' names.

The biggest source of dark money supporting Duckworth is a group with the benign name "VoteVets Action Fund," suggesting a politically active group of war veterans who have pooled resources.

While omitting donor names, the group's latest tax return contains clues as to their wealth. The average donation in 2014-15 was $106,000. The largest donation was $805,000. The smallest was $5,000.

Other publicly filed reports reveal some of VoteVets funding sources. A 2010 tax return filed by the Alliance for Climate Protection, chaired by Al Gore, reports it donated $2.6 million. In 2014 and 2015, labor unions representing food and government workers donated $1.3 million, according to U. S. Department of Labor reports.

So far, VoteVets Action Fund has spent $623,000 on television ads slamming Kirk's positions on veterans' benefits and military expenditures. The senator's campaign manager called one such ad "blatantly false."

VoteVets has not responded to requests for comment. Duckworth's spokesman had no comment on the group but said the candidate supports changes to limit the role of "dark money."

"Current policies make it too easy for dark money to flood into campaigns," spokesman Matt McGrath said.

Kirk has his own source of dark money. The U.S. Chamber of Commerce, which does not disclose donors, spent $550,150 on television ads that promote him as fighting for Illinois and job creation. Kirk and the chamber are both active supporters of the Trans-Pacific Partnership trade deal and the reauthorization of the Export-Import Bank.

• Chuck Neubauer can be reached at chuck.neubauer@gmail.com; Sandy Bergo at sbergo@bettergov.org.

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