NEW YORK – Investigative reporter Peter Schweizer has followed up his bestselling book “Clinton Cash” with a 38-page e-book exposé on former Gov. Jeb Bush titled “Bush Bucks: How Public Service and Corporations Helped Make Jeb Rich.”
Schweizer’s thesis in “Bush Cash” is that Jeb Bush’s “newfound wealth” in the years following his tenure as governor raise “important questions about conflict of interest” concerning decisions Bush made as governor.
The author charges that while governor, Bush made decisions that benefited corporations that in return provided him lucrative business opportunities, including employment, once he left office.
“What makes Jeb Bush’s accumulation of millions of dollars shortly after leaving the governor’s mansion so unsettling is from whom the money came,” Schweizer writes.
After leaving office in January 2007, Bush was greatly benefited by Lehman Brothers/Barclays, Tenet Healthcare, Rayonier and education companies run by Bush friend Randy Best, Schweizer said.
“Some granted him lucrative consulting contracts or gave him board memberships and lucrative stock options in the years immediately following his departure from the governor’s mansion.”
Schweizer documents that Bush’s net worth went from $2 million when he ran successfully for Florida governor in 1998 to earning approximately $30 million in the years following his tenure as governor.
Bush’s private foundation’s annual budget hovered around $10 million a year.
Schweizer notes that the amount of money he documented in “Clinton Cash” that Bill and Hillary accumulated in their years after leaving the White House was much greater. The Clintons have collected more than $150 million in personal income and more than $2 billion in Clinton Foundation donations since 2001.
“Also, the flow of money to Jeb Bush is not global,” Schweizer further distinguishes. “A large amount of the money flowing to the Clintons came from foreign entities,” while the flow of funds to Bush is essentially from the United States.
“In the case of the Clintons, money flowed to them both personally via their foundation while Hillary Clinton was in political office, first as a senator then as secretary of state,” he continued. “In the case of Jeb Bush, money flowed to the former Florida governor after he left the governor’s mansion.”
But the fundamental question remains, Schweizer said: “Have government power and public service been used for personal self-enrichment?”
Lehman Brothers rewards
Examining Jeb Bush’s relationship with former Wall Street investment bank Lehman Brothers, Schweizer documented that Lehman won lucrative contracts with Florida while Bush was governor.
Lehman, for example, was appointed as broker for a $139 million bond offering to fund Miami International Airport’s Capital Improvement Program. Lehman also was appointed a co-senior manager for the underwriting syndicate for the Florida Hurricane Catastrophe Corporation, a fund set up by the state to provide insurance in the event of a hurricane or other natural disaster.
While Bush sat on a three-member board that oversaw the State Board of Administration fund managing billions of dollars in investment for some 1,000 Florida school districts, towns and local agencies, Lehman won the contract to manage the SBA funds that reached a peak of nearly $150 billion during his gubernatorial tenure.
In 2007, the SBA bought a total of $1.4 billion in mortgage-backed securities from a Lehman-led group in an investment that turned out to be a disaster for the state when the sub-prime real estate market collapsed in 2008.
The timing of the purchase, Schweizer writes, raised “serious questions about what role, if any, Jeb Bush played in their purchase.”
Schweizer notes that a month after Jeb left the governor’s mansion, in January 2007, he established a consulting firm called Jeb Bush and Associates that was awarded subsequently a contract with Lehman Brothers worth $1 million a year.
The sum, Schweizer comments, was “extremely high pay even for an ex-politicians.” Lehman Brothers paid about half that sum to former Ohio congressman and current Ohio Gov. John Kasich, who served as chairman of the powerful U.S. Congressional Budget Committee and is now running for the GOP presidential nomination.
Lehman hired Bush in August 2007, Schweizer writes, noting that in July and August 2007, Lehman sold the state of Florida $842 million in mortgage-backed securities, the beginning of what ultimately totaled nearly $1.3 billion.
“These highly risky investments were already controversial in 2007 and played an enormous role in the 2008 financial crisis,” he continued. “When word spread that the SBA had purchased a risky investment, panic set in as local governments and school districts tried to withdraw their funds.”
Schweizer stressed that investors like the Jefferson County School District in Florida, which kept nearly $4 million in cash in the Lehman-managed fund, “were left struggling to cover basic administrative costs.”
By December 2007, the SBA had to freeze accounts temporarily to prevent a run on the account. As the mortgage-backed securities market continued to tank into 2008, Florida faced a billion dollar loss.
“During this curious timing, both Jeb Bush and Lehman deny there was any connection between Jeb Bush’s hiring and Lehman’s sale of mortgage-backed securities to Florida,” Schweizer writes.
Highly lucrative deals
The other three case studies follow a similar pattern.
Schweizer chronicled how Bush as governor assisted Florida health care giant Tenet Healthcare with managing the 15 hospitals the group had operated in Florida since 2005. Bush implemented a Medicare Reform pilot program that benefited Tenet Healthcare directly by increasing much needed Medicare reimbursements and relieving pressure from the U.S. Department of Justice under President George W. Bush and the Florida attorney general, which were suing Tenet for “improperly assigning diagnosis codes for some hospital stays to get higher Medicare reimbursements.”
The pilot program allowed Bush as Florida governor to create a Low Income Pool LIP, designed to reimburse hospitals for the cost for uncompensated care to managed care plans, instead of the previous model of reimbursement through traditional fee-for-service programs, resulting in granting up to $1 billion in funds to Florida hospitals for uncompensated care. It was a nearly $300 million increase from what had been previously allocated.
Three months after he left office, Bush joined the board of Tenet Healthcare, then the largest publicly traded hospital company in the United States, owning at that time 12 hospitals in South Florida.
“Jeb’s deal with Tenet was highly lucrative,” Schweizer comments. “As in the case of Lehman, his compensation package was substantially higher than that of his peers. Indeed, his pay and stock options for the first year were more than those of any of the eight other non-Tenet employee directors received.”
Schweizer documented that initially Bush received $260,000 in stock plus fees totaling $191,581, with the compensation going up. In May 2011, Bush acquired $441,203 worth of Tenet Stock that doubled in value by the time Bush sold it in October 2013, earning him a profit of $462,013 in just 29 months.
“In total, Jeb received nearly $2.1 million in director’s fees and stock from Tenet,” Schweizer concluded. “SEC records show that as of March 2014, Bush held more than 59,000 shares of Tenet stock, then valued at over $3 million.”
Bush benefited Voyager Expanded Learning by awarding the company lucrative contracts from the $313 million he pushed through the Florida legislature to provide remedial programs designed to assist students at risk of failing a grade.
Voyager Expanded Learning was formed in 1995 by Randy Best, an entrepreneur close to the Bush family.
Schweizer notes that Best had given a maximum contribution to Jeb Bush’s gubernatorial campaign in 1998 and in 2000 served as a major bundler for George W. Bush’s presidential campaign.
Schweizer estimated that Best paid Jeb Bush speaking fees ranging between $40,000 to $75,000 in 2007, 2011 and 2012.
The last of the four case studies centered on one of the largest private landowners in the state, Rayonier, a timber company that placed Bush on its board of directors after he left office. The deal included a fee of $40,000 a year and hundreds of thousands of dollars in Rayonier stock.
While still governor, Jeb and his cabinet approved $98.89 million in land deals to buy some 122,000 acres from Rayonier and provided $2.6 million in state and local tax incentives to lure Rayonier to move its headquarters from Stamford, Connecticut, to Jacksonville, Florida.
The Jeb Bush wealth timeline
“No one, of course, should fault a politician who has left public life and started a business or is making money that is disconnected from favors he or she performed for corporations or individuals while in office,” Schweizer observed.
“Hitting the lecture circuit?” he asked rhetorically, “Sure. ut what if the bulk of their moneymaking after leaving office comes from entities they did favors for while in public life? Or what if the ‘services’ they perform in the private sector relate to their political relationships with government officials, or may tie in to other family members who are still in office?”
Schweizer carefully traced Jeb Bush’s wealth timeline.
“Jeb Bush, throughout his early professional career, experienced a modicum of financial success in real estate,” he observed. “However, he accumulated a new magnitude of wealth in the years following his tenure as governor. How his public service relates to his newfound wealth raises important questions about conflicts of interest and decisions he made while governor.”
Schweizer noted most governors “wield enormous power” and Florida governors are no exception.
“They get to pick winners and losers and have enormous influence over state regulators and myriad government agencies that deal with issues such as land use, environmental regulations, granting contracts in everything from infrastructure to the management of state pension funds and determining where roads and other projects will be constructed.”
He pointed out that while members of the legislative branch – U.S. Congress, Senate or a state legislator – “can introduce or push legislation or make a phone call to a regulator, governors enjoy much richer opportunities to help or hurt individual businesses.”
“Intent is nearly impossible to discern,” Schweizer admits. “What makes Jeb Bush’s accumulations of millions of dollars shortly after leaving the governor’s mansion so unsettling is where the money came from.”
He says decisions made for the benefit of powerful entities such as corporations, labor unions and individual investors “that will be repaid later on for politicians undermine the very fabric of our electoral system and breed cynicism.”
“In the case of Jeb Bush, numerous corporations or investment firms benefited from his direct actions on their behalf as governor and later paid him lucrative fees or granted him stock options in the years immediately following his departure from the governor’s mansion,” Schweizer concluded,
inferring while the nexus between decisions made in office and wealth received later may not be completely provable in Bush’s case, questions remain that could become increasingly relevant as the 2016 presidential election campaign unfolds.