A Freddie Mac Money Trail Catches Up With McCain
http://www.truthout.org/092808Z
Few advisers in John McCain's inner circle inspire more loyalty from
him than campaign manager Rick Davis. McCain and his wife, Cindy,
credit the shrewd, and sometimes volatile, Republican insider with
rescuing the campaign last year when it was out of money and on the
verge of collapse. As a result, McCain has always defended him - even
when faced with tough questions about the foreign lobbying clients of
Davis's high-powered consulting firm. "Rick is a friend, and I trust
him," McCain told NEWSWEEK last year.
Last week, though, McCain's trust in Davis was tested again amid
disclosures that Freddie Mac, the troubled mortgage giant that was
recently placed under federal conservatorship, paid his campaign
manager's firm $15,000 a month between 2006 and August 2008. As the
mortgage crisis has escalated, almost any association with Freddie Mac
or Fannie Mae has become politically toxic. But the payments to
Davis's firm, Davis Manafort, are especially problematic because he
requested the consulting retainer in 2006 - and then did barely any
work for the fees, according to two sources familiar with the
arrangement who asked not to be identified discussing Freddie Mac
business. Aside from attending a few breakfasts and a political-action-
committee meeting with Democratic strategist Paul Begala (another
Freddie consultant), Davis did "zero" for the housing firm, one of the
sources said. Freddie Mac also had no dealings with the lobbying firm
beyond paying monthly invoices - but it agreed to the arrangement
because of Davis's close relationship with McCain, the source said,
which led top executives to conclude "you couldn't say no."
The McCain campaign told reporters the fees were irrelevant
because Davis "separated from his consulting firm … in 2006,"
according to the campaign's Web site, and he stopped drawing a salary
from it. In fact, however, when Davis joined the campaign in January
2007, he asked that his $20,000-a-month salary be paid directly to
Davis Manafort, two sources who asked not to be identified discussing
internal campaign business told NEWSWEEK. Federal campaign records
show the McCain campaign paid Davis Manafort $90,000 through July
2007, when a cash crunch prompted Davis and other top campaign
officials to forgo their salaries and work as volunteers. Separately,
another entity created and partly owned by Davis - an Internet firm
called 3eDC, whose address was the same office building as Davis
Manafort's - received payments from the McCain campaign for Web
services, collecting $971,860 through March 2008. In an e-mail to
NEWSWEEK, a senior McCain official said that when the campaign began
last year, it signed a contract with Davis Manafort "in which we
purchased all of [Davis's] time, and he agreed not to work for any
other clients." The official also said that though Davis was an
"investor" in 3eDC, Davis has received no salary from it. As to why
Davis permitted the Freddie Mac payments to continue, the official
referred NEWSWEEK to Davis Manafort, which did not respond to repeated
phone calls. One senior McCain adviser said the entire flap could have
been avoided if the campaign had resisted attacking Barack Obama for
his ties to two former Fannie Mae executives, which prompted the media
to take a second look at Davis. "It was stupid," the adviser said. "A
serious miscalculation and an amateurish move." Still, this adviser
said, McCain's faith in his campaign manager remains unswerving.
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