Florida developer Al Hoffman learned how to talk serious business during 20 years of cutting deals with conglomerates like Beatrice Foods. He bought 1,600 undeveloped acres near Tampa from them in 1985, with an unsolicited bid. "I wrote out a check for $100,000 to keep their attention," he told an interviewer. Then he spent $22 million for the property.
As with business, so too with politics.
Hoffman was Jeb Bush's 1994 campaign finance chairman and has bought a coveted place in the inner sanctum of the man who hopes to be elected governor next month.
Because although Bush gets millions of dollars from corporate donors, only a relative handful -- seven, actually -- contributed above and beyond the call of duty during the crucial months after Bush's narrow 1994 gubernatorial loss to Gov. Lawton Chiles.
The vessel that Bush's four-year 1998 election campaign sailed is called the Foundation for Florida's Future. Nominally a nonpartisan, nonprofit think-tank, the foundation employed several of Bush's key campaign personnel -- Hoffman is an unpaid director -- and set about the task of keeping Bush's visibility high. In 1995, the foundation's inaugural year, 70 donors wrote checks for at least $5,000 -- a sum that provides a dividing line for tax reporting purposes. But only those seven -- including Jeb's parents, former President and First Lady George and Barbara Bush -- donated more.
Questions about the identity of these donors have animated Democratic challenger Lt. Gov. Buddy MacKay's campaign. MacKay has demanded details about the donations. Bush at first refused to reveal the names, citing the donors' expectation of privacy. Then Bush released a list of all donors who contributed more than $5,000 to the foundation, while refusing to say how much they gave. MacKay thinks the front-runner has something to hide. "What's so mysterious?" he demanded on Sept. 6. "Is it money from big tobacco? Is it money from big oil? Is it money from big sugar?"
Orlando Weekly has obtained documents that match the 1995 donors with the heretofore secret amounts they gave. (Bush still refuses to link dollar amounts with donors to the foundation in 1996.) Along with Hoffman, they include the CEO of one of the country's largest office-machine manufacturers, a right-wing New York investor, and the CEO of one of the state's most troubled health maintenance organizations. The foundation's all-time biggest donation, $70,000, came from a powerful state road and bridge contractor deeply involved in a 1992 bribery scandal that brought down the government of Brazil.
Told of the Weekly's findings, MacKay's campaign spokeswoman, Michelle Kucera, words her response carefully. "Almost 200 days ago we asked Bush to come clean and reveal the amounts and contributors who gave to his shadow campaign for governor," she says. "Now that there is some evidence that these folks who have given to him would have business with the state of Florida, that is troubling."
Bush spokesman Cory Tilley defends the foundation -- for which he formerly worked -- as "a pure public policy organization," and his current boss as a man of integrity. "There is no contribution that will ever sway his opinion," he says of Bush. "If people think they're going to sway his opinion `with money`, they're wrong."
With $7 billion in annual revenues, Brazil-based Odebrecht Contractors is one of that country's leading industrial conglomerates. Highways, subways and dams account for some of its biggest contracts. Through mergers the company also has diversified into chemicals manufacturing, offshore oil drilling, and pulp and paper production. Odebrecht mines diamonds in Angola and operates in 18 countries on every continent except Antarctica.
Odebrecht Contractors of Florida cuts a modest political profile for a company with $1 billion in U.S. revenues since its 1991 arrival in Miami. With several hundred million dollars in current state and local government contracts, including the $22.6 million site preparation job for the expansion of Orlando International Airport, Odebrecht and its corporate officers have donated only about $20,000 to political campaigns during the past few years.
This year company executives gave $1,000 to Bush and $1,500 to MacKay. The company as a whole delivered $500 to the state Republican Party and $5,000 to the state Democratic Party, campaign finance records show. Since 1994, Odebrecht Contractors of Florida and its executives and directors have spent $12,250 to influence state elections.
On the national scene, Odebrecht is similarly small-time. Of the less than $8,000 given to federal candidates since 1994, $2,500 has gone to Florida Democrat Bob Graham's Senate reelection effort, with twice that amount to the Republican Congressional committee.
So, for Odebrecht, the $70,000 it gave to the Bush foundation is a big check. It's more than three times the total the corporation spent on other campaign contributions in the past four years, and it amounted to nearly one-tenth of the budget for the Foundation for Florida's Future in 1995, the year it was given.
"We were very proud of the money we were able to raise," says Tilley. "I don't think it's the back door `to the campaign`. This contribution was made public by us -- as an over-$5,000 contribution. We were more open then we were required to be."
But not as open as they could have been.
"The law doesn't say it's supposed to be kept secret; it says they have the option of keeping it secret," notes Paul Hendrie, communications director for the Washington-based Center for Responsive Politics, the country's premier campaign finance watchdog. "There's a big difference. Someone running for governor who would want to avoid any perception of catering to any special interests would voluntarily release this information."
Calls to Luis Oswaldo Lopes-Leite, the president of Odebrecht Contractors of Florida, were unreturned.
"I can't speak for Odebrecht," Tilley says. "They're located in Miami. I think it makes a lot of sense for them to be involved in their community. People have been trying to make -- he `MacKay` only talks about this because he has nothing else to talk about in the campaign. It gets more and more hysterical.
"Odebrecht has given money to both sides `in this campaign`," Tilley notes. "As far as I know they're a very well-respected company."
Odebrecht's (and Bush's) aversion to publicity about the foundation's largest single benefactor may stem from a six-year-old political scandal. In 1992, Brazilian President Fernando Collor de Mello was impeached amid revelations that his aide had established a consulting firm for the sole purpose of collecting bribes -- $55 million worth -- from Odebrecht and other construction companies.
Odebrecht initially declined comment on the bribery scandal but it soon became clear the company had paid $3.2 million to the president's bagman. The corporation responded to press criticism by hiring one of Brazil's foremost business journalists as a corporate spokesman. Payments the company made to Collor's aide were solicited by the "client," and were "to know if the projects we planned were or were not `the president's` priorities," the spokesman told a reporter for the New Orleans Times-Picayune.
Brazilian police subsequently raided the home of Ailton Reis, an Odebrecht corporate director. They removed 90 pounds of documents that allegedly showed Odebrecht to be part of a nine-company conspiracy that, through bribery and collusion, manipulated the Brazilian budget to deliver favored projects at up to 100 percent markup over the jobs' actual cost -- when there was an actual job.
Odebrecht claimed the documents were merely studies of possible candidates to be supported for election, a common though illegal practice in Brazil. Reis reportedly told the Brazilian Parliamentary Commission of Inquiry that his company was planning to invest $12 million in these candidates' campaigns. But according to news reports, the commission said the documents contained a detailed guide to a secret government made up of key businessmen, politicians and officials; Odebrecht's role was to divide the corruption's spoils among the members of this "secret society."
"A parallel power structure exists," charged Brazilian Sen. Paulo Bisol, who chaired the commission of inquiry. "It is a power that is respectable, refined, very well organized and operationally almost perfect."
The documents reportedly showed that 36 percent of Brazil's public-works funds were earmarked for the nine companies and the 27 legislators, three governors and six cabinet members involved in the scheme. Bribes to the congressmen varied between three and 10 percent of the value of each contract.
Odebrecht officials claimed the company was fighting to reform Brazil's contracting system into one in which the lowest bonded bidder gets the work. The company also claimed to be lobbying for campaign finance reform.
In February 1994, a Brazilian judge banned Odebrecht and 23 other companies from bidding for or collecting on federal contracts in Brazil. The ruling was overturned one week later.
Contract reform passed. Then Brazil privatized the management of public assets. Odebrecht won concessions to operate highways, sewage treatment facilities and a hydroelectric dam, among other things. The company also joined with a bank and a major newspaper publisher to bid for cellular telephone rights. Press criticism of the company has ceased.
In 1990 Odebrecht opened its Florida subsidiary and soon had six projects in the Dade County area, including a $25 million contract to extend the city's Metromover transit system and the I-95 flyover. State officials report the company works on time and on budget, although the nonunion firm has been cited by the U.S. Occupational Safety and Health Administration 23 times and has paid a total of $12,375 in safety-related fines since opening shop in Florida. On June 1, 1993, a 43-year-old Odebrecht carpenter named Marcos Reyes fell to his death from a platform he was building for an elevated road. Odebrecht was fined $3,375 for safety violations related to that fall.
Five of the safety citations were levied on an Odebrecht joint venture with Church & Tower Inc., the company owned by the late Jorge Mas Canosa. As head of the anti-Castro Cuban American National Foundation, Canosa was a South Florida political power broker whose influence extended through the Reagan, Bush and Clinton administrations.
Jeb Bush attended Canosa's funeral, but Odebrecht's path crossed Bush's in at least one other way. In December 1995, the Miami Black Business Association honored Odebrecht's Luis Lopes-Leite and Armando Codina, president of the Codina Group and a Bush business partner, with awards.
"When we started in Florida, we looked for companies to help us achieve our goals," Lopes-Leite told the 1,000 business owners, politicians and other guests at the awards banquet. "`T`he results that we have isn't the $400 million worth of contracts but the integration we have with the community."
Integration -- or rather, attracting black voters -- was a top priority of Bush's foundation. Soon after Bush established the foundation and named himself chairman, he hired Public Opinion Strategies, the polling firm he uses for his campaigns, to poll black voters on, in Bush's words, "the attitudes of African Americans toward conservative governance and ideas."
With the foundation's help, Bush developed a substantial network of African-American supporters, helping put MacKay and other Democrats on the defensive with their traditional constituency.
The foundation also was inextricably integrated with Bush's political campaigns. Sally Harrell, Bush's current campaign manager, was the $73,500-a-year executive director of the foundation, while Tilley earned $50,000 a year as her deputy. Other foundation employees who either worked for the campaign or the Republican Party, or do now, include Olivia Quintana, Cecelia Rush and Brian Yablonski, who also worked for George Bush and served as Jeb's co-author on "Profiles in Character," the foundation-published book depicting "our need to recapture self-government through virtuous individuals." The book jabs at MacKay as a believer in "the cult of government."
The big funders' money helped build the foundation into a sophisticated Bush propaganda machine. Newsletters, pamphlets and a glossy quarterly magazine, Impact, carried a steady stream of Bush ideas and pictures, while the organization's "educational" role was played up in order to give Bush credit for such things as the Florida Legislature-passed unemployment tax cut. When news organizations questioned the foundation, Bush protested. "My opponents continue to drag the good work of the Foundation for Florida's Future into the partisan political arena -- a place the foundation in reality has never been -- and was never intended to be," he wrote in a letter published in the Palm Beach Post, in response to a June 8 article headlined "Jeb Bush won't say who gave big bucks."
The foundation's tax status allows it to lobby for political change. Because of this status, donors cannot deduct gifts to the foundation from their own taxes. Yet they gave generously anyway.
In 1995 the foundation raised $771,000; the next year, 1996, it raised about $1 million. But when Bush left in 1997 to campaign full time, he took his backers with him; the foundation's annual report for that year shows a nearly 60 percent drop in the number of $5,000-and-over donors.
The 131 members of that group combined to give at least $119,000 to Bush's 1998 election campaign fund; moreover, since January 1997 they've given a combined $1.7 million to the state GOP, according to an analysis by the St. Petersburg Times.
To help establish the Foundation for Florida's Future, Jeb Bush and his wife, Columba, gave the foundation $17,075 in its first year; his parents kicked in another $30,000.
Apart from Bush money and Odebrecht, the foundation's five other sugar daddies in the $5,000-and-over club are a diverse mix. One is an insurance holding company. Three others are staunch Republicans who support their party's most conservative candidates. One is a strict pragmatist who has given more money to Democrats than Republicans while openly supporting conservative lightening rods like North Carolina Sen. Jesse Helms.
Allied International Holdings Inc. -- a contributor of $10,000 to the Bush foundation through executives David T. Smith and Charles T. Landrum -- is an insurance holding company with offices in Treasure Island. The company has given $132,500 to Republicans in Florida since 1994, all but $1,000 of it directly to the state party. (That $1,000 went to Republican Insurance Commissioner Tom Gallagher's campaign for education commissioner).
In addition to his foundation gift, Allied president Smith has given $10,800 toward Florida political races -- $10,000 to the Republican Party in March, $300 to the Bush campaign. At press time he was traveling and could not be reached. Landrum is no longer with the company.
Danka CEO Daniel M. Doyle is another strong GOP backer. A leading citizen in St. Petersburg, where his office-machines company draws $3 billion a year in revenue, Doyle has involved himself in civic causes such as the symphony, and he has contributed to the re-election, year after year, of conservative stalwart Mike Bilarakis to Congress. Doyle gave Bush's foundation $15,000 in 1995, and has also been an A-list donor to Republicans, giving $192,750 since 1994, primarily to the national and state party organizations.
Danka looked hot in 1996 when it bought out Kodak's copier-machine unit. But the acquisition soured, and this year shareholders filed a fraud suit against top Danka executives, charging they knowingly misled investors with rosy earnings projections while simultaneously dumping the stock. In one day last December, Danka lost more than $1 billion of its then $1.76 billion market value.
Calls to Doyle's office were not returned.
New York/Florida real estate investor Lawrence Kadish, in an interview three years ago, called himself an ordinary moderate Republican. But Kadish is a political activist who, like Bush's former campaign finance chairman Hoffman, is a big fan of Texas Sen. Phil Gramm, the far-right's standard-bearer in the 1996 presidential race. Gramm was a long shot, but wealthy backers did their best in the early going to make it seem otherwise by purchasing straw poll votes. For the Iowa straw, Kadish bought 1,000 tickets at $25 each to boost Gramm's chances.
Kadish has served since 1995 on the executive committee of the National Jewish Coalition, a Republican group. Since 1990 he and his immediate family have donated $392,759 to political campaigns. He has targeted $240,000 at state races since 1994, mostly in gifts to the Republican National State Elections Committee. Since 1994, that committee has forwarded at least $2.4 million to the state Republican Party.
Such pass-through funding is a relatively recent wrinkle in campaign finance, according to Hendrie, of the Center for Responsive Politics. "It wouldn't surprise me if one of the things they were trying to do is make it harder to track the original sources of these contributions," he says. "It's not legal to give to a PAC and say, ‘I want you to pass this money through to a candidate,' but on the other hand those coincidences happen all the time. Those things tend to happen with a wink and a nod."
Kadish also could not be reached for comment.
Unlike Kadish, who has kept his politics in the shadows, polo-playing developer and former fighter-jet pilot Al Hoffman speaks loudly and often. Hoffman raised money for Bush's 1994 campaign, donated $30,000 to the foundation in 1995, sits on the foundation's board and did his best to undercut MacKay's chances of reaching campaign finance parity with public money.
In 1996 Hoffman and another Bush operative, Winter Park investor Phil Handy, started "Citizens for Campaign & Government Spending Reform" and launched a petition drive to knock the state's public campaign finance law -- designed to blunt the effect of special interests -- off the books. "It is outrageous for state government to spend tax dollars for political welfare when this money could have educated 4,100 Florida school children, hired an additional 467 teachers, kept 774 prisoners behind bars, or miracle of miracles, that money could have been given back to taxpayers," Hoffman said at the time.
The campaign failed, and so far this year MacKay has received $883,838 of taxpayer money for campaigning; Bush has declined his share of the cash. Hoffman gave $40,000 to the reform drive. (Doyle chipped in $35,000; the two donors together accounted for nearly 75 percent of the money spent on the effort.) Since 1994, Hoffman has pledged a grand total of $186,616 to political campaigns -- a sum that amounts to peanuts for him.
In contrast, Hoffman and investors spent about a half-billion dollars to buy WCI Communities in 1995 from Westinghouse. Last month he merged that scattered 24,000-acre acquisition with his other company, Florida Design Communities, to create one of Florida's largest real-estate companies. The new company, with 2,100 employees and about $550 million in revenues, has 25 communities on 38,000 acres under development around Florida. Hoffman is chief executive of the combined company, which at press time was still unnamed.
In buying WCI, Hoffman has taken a risk: He's betting that Florida will remain a low-tax haven for rich retirees. He, too, did not return repeated phone calls seeking comment. But writing in the fall 1996 issue of the foundation's Impact magazine, Hoffman warned that wealthy oldsters were taking their money to other states. He dismissed state officials who argue the state has paid dearly for catering to the elderly: Seniors have moved in, but have opposed most progressive initiatives in education and taxation. Hoffman uses his money and growing power to make sure that's the way it stays.
Or does he?
Or does he?
"None of Jeb's donors are involved in policy," Tilley insists, adding, "We need senior citizens, they're a big economic plus for the state and the government has ignored them. I'm not distinguishing at all between wealthy and poor seniors."
A struggling HMO
Steven and Rebecca Scott differ from the other big early supporters of the Foundation for Florida's Future, in that they give most of their money to Democrats. Still, the Scotts are members of an exclusive club the Center for Responsive Politics calls "cash constituents."
The Scotts gave $25,000 to the foundation in 1995 and have given $14,750 to support the re-election of North Carolina Republican Jesse Helms. But that's to be expected, as Scott's main business is located in North Carolina. Indeed, the Scotts' pattern of contributions reveals a keen sense of the power of political money and a philosophy dominated by pragmatism rather than ideology.
Excluding donations to Bush's foundation and other nonprofit foundations, the couple, their business and top executives have given a total of $362,000 to political causes this decade -- and more than $230,000 of that to Democrats and the Democratic Party.
But these are small sums compared to what is at stake in Scott's government-regulated health maintenance organization.
Scott is the 49 percent owner and chief executive of Coastal Physician Group, one of whose companies, Doctor's Health Plan, was fined $500,000 after a routine review of its policies and procedures by the North Carolina Department of Insurance. The March settlement -- the largest ever in that state -- was deferred until the company can pay it without hurting service to the plan's 41,000 members.
Citing "violations of state law in several areas of the company's operations," the department said Scott's company "had not established quality of care and service standards, and did not have an adequate program to monitor and improve the quality of care and services provided by network providers."
Scott responded by buying back the troubled subsidiary himself, for $6 million. This allowed the company to continue operating without posting an additional million dollars with the Department of Insurance as a performance bond.
But the North Carolina fine was small potatoes compared to Scott's trouble in Florida. At Coastal's annual meeting on Aug. 14, Scott said his North Florida subsidiary, Healthplan Southeast, lost $1.9 million in the second fiscal quarter of 1998. The subsidiary is among Scott's largest, with 85,000 patients. Losses like these have occurred since 1994, when Coastal went on a buying binge and wildly diversified itself. While Coastal and its subsidiaries won government medical contracts, management of the suddenly massive company lagged. A flood of losses followed, but government contracts continue.
In February 1997, Florida awarded a Healthplan Southeast subsidiary, Discovery Healthplan, the state's fourth-largest Medicaid assignment -- with a potential 96,000 patients in 36 North Florida counties.
Bruce Middlebrooks, spokesman for the Florida Agency for Healthcare Administration, which awarded the contract, says providers like Healthplan Southeast are reviewed annually. "We also look at the financial stability of their owners and their history," he says, adding he was unaware of the North Carolina fine.
In September, Newsweek magazine ranked HMOs across the country on medical performance, customer satisfaction and accreditation by the National Committee on Quality Assurance. Of the 96 HMOs that responded, Healthplan Southeast ranked 94th.
On Oct. 2 Coastal announced the renewal of Healthplan Southeast's contract with the state for the delivery of healthcare services to 33,000 state workers. The company estimated the contract will generate $46.9 million in revenues this year, an increase of $4.9 million over last year. "We are very pleased to have the renewal finalized and in place for the thousands of state employees who have chosen Healthplan Southeast as their HMO," said Joe Sharp, Healthplan's chief executive. "We greatly value our state members and will remain committed to providing the kind of service and high quality care they have come to expect from HPSE."
Actually, Coastal is looking to sell the division.
Scott's companies have lost more than $230 million since 1996. Four years ago Coastal Physician Group stock traded as high as $40 per share. These days it goes for around 32 cents and is struggling to remain listed on the New York Stock Exchange.
"The good news is, we're poor but honest," Scott told the Durham (N.C.) Herald-Sun last summer, referring to the scandal surrounding Columbia/HCA Healthcare Corp., which has been charged with massive Medicare billing fraud.
Yet Scott, who is paid $400,000 annually as CEO of Coastal Physician Group, has maintained heavy political giving despite his company's slide. As recently as June 2 he gave $50,000 to the Republican Party of Florida.
Like the other donors to the Bush foundation, Scott did not respond to numerous messages left with his secretary.
This year Florida Democrats and MacKay have pushed for reform of state laws to allow HMO clients to sue when care is improperly denied, a provision that Chiles vetoed in 1996. Republicans generally have favored health care and insurance companies, although Bush's plan calls for increased regulation. Last month, after watching the costs of some plans go up as much as 50 percent, the Florida Department of Insurance announced it would seek greater authority to hold down rate premiums. "We are putting the companies on notice," said Frank Dino, the department's chief actuary for health rates.
Skewing the political process to make a buck may not be Scott's purpose. And Al Hoffman might not influence his friend to keep Florida's tax policies on a regressive model. Odebrecht certainly doesn't consider its secret $70,000 payment to a future governor and presidential hopeful to have been a bribe, and may not see an increase in the number of state construction contracts it gets. The Foundation for Florida's Future, an independent, nonpartisan think tank, may yet see its fund-raising income bounce back. Its mission -- "to promote dialogue among citizen activists, business leaders and public opinion leaders, and to increase grassroot's `sic` involvement in public policy decision making" -- is noble.
"This is about the largest non-issue in the campaign," Tilley wrote in an e-mail to Orlando Weekly. "Believe me -- outside of the MacKay campaign and members of the press -- no one cares about this non-issue."
The millions the foundation has taken from corporate criminals and conservative politicos have likely done as little to influence Bush as it has the foundation.
After all, the foundation -- and Jeb Bush -- wrote the book on character.
Eight largest donors to Foundation for Florida's Future
The Bush campaign previously released the names of 131 individuals and corporations who gave at least $5,000 to the Foundation for Florida's Future, which Jeb Bush founded in 1995 and served as chairman until 1997. But he has refused to link contributors with their actual gifts. Orlando Weekly has obtained documents that identify the eight contributors who gave more than $5,000 in the foundation's inaugural year. (Bush still refuses to link dollar amounts with donors to the foundation in 1996.) The contributors:
$70,000 from Miami-based Odebrecht Contractors of Florida, a subsidiary of a Brazilian multinational corporation deeply involved in a 1992 bribery scandal that brought down the government of Brazil; $35,000 from Al Hoffman, a real estate developer and campaign finance chairman for Bush's 1994 gubernatorial campaign; $30,000 from former President and First Lady George and Barbara Bush, the candidate's parents;
$25,000 from Rebecca and Steven Scott, CEO of Coastal Physician Group and one of the state's most troubled health maintenance organizations; $17,075 from Jeb and Columba Bush; $15,000 from Daniel M. Doyle, CEO of St. Petersburg-based Danka Office Machines, one of the country's largest office machine manufacturers; $10,000 from Susan and Lawrence Kadish, a New York and Florida real-estate investor; and $10,000 from Allied International, an insurance holding company, through president David T. Smith and former executive Charles T. Landrum.
Source: Internal Revenue Service Form 990, obtained by Orlando Weekly from the Florida Department of Agriculture and Consumer Services headed up by Commissioner Bob Crawford, who this September became the highest-ranking state Democrat to endorse Republican Jeb Bush.
Edward Ericson Jr. is Orlando Weekly's News Editor. He can be reached by phone at (407) 645-5888, Ext. 235.
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