Top McCain Adviser Has Found Success Mixing Money, Politics

By Matthew Mosk
Washington Post Staff Writer
Thursday, June 26, 2008

As Sen. John McCain's top presidential campaign adviser, Richard H. "Rick" Davis has worked for almost a year without compensation, telling reporters that the sacrifice shows his dedication to the cash-strapped Arizona Republican. He also took a protracted leave from his Washington lobbying firm to distance himself from ethical questions.

But in the eight years since Davis first managed a McCain campaign, his relationship with the senator has been a lucrative commodity. He and his lobbying firm, Davis Manafort, have earned handsome fees representing clients who need McCain's help in the Senate. He also has made money from a panoply of McCain-related entities, some of which have operated from the upscale riverfront office space that houses his lobbying shop.

In all, Davis, his firm and a company he helped start have earned at least $2.2 million in part through their close association with McCain, his campaign and his causes, according to a review of federal campaign, tax and lobbyist disclosure records.

Their relationship is typical of the symbiotic ties that have come to define the culture of the nation's capital. Last summer, Davis provided McCain free tactical advice that rescued his White House bid and helped him clinch the GOP nomination. In the political offseason, Davis turned the relationship into a business asset.

Davis is not the only McCain adviser to earn substantial income from McCain-affiliated endeavors both during and after his campaigns. Longtime fundraiser Carla Eudy earned $138,434 working for McCain's 2000 presidential bid. But she made far more -- $813,000 -- working for McCain's leadership committee, the Reform Institute, and another nonprofit McCain chaired, the International Republican Institute, tax records show. Some of the money has gone to her company. Trevor Potter, McCain's top lawyer, has brought in nearly $750,000 in fees for his law firms by working for such endeavors, as well as $949,000 in compensation over five years for the nonprofit he helped create, the Campaign Legal Center, which has defended in court the McCain-Feingold campaign finance law, tax records show.

Firms run by Rebecca Donatelli, McCain's Internet strategist in 2000, have since then done more than $700,000 in work for McCain-related endeavors, though the campaign notes that some of that money has gone to cover credit card transaction fees for money raised online.

Davis declined repeated requests for an interview. In response to detailed questions, the campaign issued a brief statement. "During this campaign, Mr. Davis has not received a single penny from any company doing business with the McCain campaign," it said. Through the campaign, Eudy, Potter and Donatelli declined to comment.

While the three serve on McCain's advisory team, Davis, 49, is now the candidate's campaign manager and point man on ethics. He wrote the conflict policy that spurred resignations a few weeks ago among McCain advisers, who also had roles as Washington lobbyists or were affiliated with outside groups.

Several of those who have left were foreign lobbyists, and since then some advocacy groups have called for Davis's ouster because his lobbying firm in 2006 represented a Ukrainian politician opposed by the U.S. government. "Why would a candidate for president hire a lobbyist whose firm worked against our national interests?" asked David Donnelly, director of Campaign Money Watch.

McCain has stood by Davis and promoted him after bitter infighting last summer. McCain's friend Scott Reed, who managed Robert J. Dole's 1996 presidential campaign, with Davis as a deputy, said Davis deserves credit for "being the manager of the most amazing political comeback in modern political history."

A Navy brat who left the University of Alabama for the campaign trail, Davis once said his father warned him, "You can't make any money from doing politics." Davis did not listen. After learning the campaign business in Alabama and Mississippi, he became national field director for the College Republican National Committee during Ronald Reagan's 1980 presidential bid.

He left the Reagan White House to work with longtime lobbyist Paul Manafort, a job that later evolved into a partnership. In their political work, Davis served as Manafort's deputy in orchestrating the 1996 Republican National Convention. Both joined Dole's presidential team.

While working for Dole, Davis told a reporter that he was "blown away" by McCain's unconventional politics. In 1999, when McCain began his first presidential bid, he chose Davis to manage his campaign. When the effort fizzled, Davis returned to lobbying and put the McCain connection to use.

When McCain started the Reform Institute in 2001 to promote campaign finance reform, he turned to Davis. Though still actively lobbying, Davis pulled in $120,000 as an institute consultant in 2002.

Davis brought with him other McCain insiders, and fundraising took off. In 2003, tax filings show, Davis earned $110,000 in fees, and in 2004 and 2005, while he served as president of the institute, his salary totaled $165,000. Tax forms said he worked five hours a week or "as needed."

But critics questioned whether a nonprofit closely tied to McCain should collect donations from companies with business before the Senate commerce committee, which McCain chaired.

While running the institute, Davis added several lobbying clients who needed McCain's help.

In 2003, for instance, DHL Holdings (USA) and Airborne hired Davis to lobby the Senate to facilitate a merger. Hotly opposed by shipping giants FedEx and United Parcel Service, the merger encountered opposition from Sen. Ted Stevens (R-Alaska) on the commerce committee. McCain took steps that helped Davis's clients. He thwarted Stevens's effort to insert language into legislation that would prohibit foreign-controlled companies such as DHL from holding certain military contracts.

Davis's firm earned $125,000 from Airborne in 2003 and $465,000 from DHL parent company Deutsche Post World Net (USA) from 2003 to 2005, records show.

A group called Preserve Luke Air Force Base hired Davis in 2004 and 2005 to help win approval of an Arizona land swap. Guy Inzalaco, who was part of a development group, formed Preserve Luke AFB to push for the exchange. He knew McCain's help would be critical.

"We were like, 'Okay, who's close to Senator McCain?' " Inzalaco recalled. "There were a number of people. We talked to them all. Rick [Davis] was one of them. We knew he was tight with the senator."

Inzalaco's group paid Davis's firm $125,000 to lobby the Senate, records show. The deal ultimately did not go through. McCain worked to authorize $14.3 million in a 2003 defense bill to buy land around Luke Air Force Base -- a provision sought by SunCor Development, which has been a McCain supporter. The Air Force later paid SunCor $3 million for 122 acres near the suburban Phoenix base.

Campaign spokesman Brian Rogers said that "whatever lobbying activities that Mr. Davis did" on those matters "preceded his employment with, and is therefore wholly unrelated to, the campaign."

While Davis focused on domestic clients, Manafort did foreign work and helped manage the campaign of Ukrainian politician Viktor Yanukovich, even as the U.S. government (and McCain) opposed him because of his ties to Russia's Vladimir Putin.

In 2006, Davis helped plan McCain's next White House run, envisioning a corporate-style campaign modeled after President Bush's 2004 bid. But by mid-2007, fundraising faltered. Inside the campaign, aides grumbled about expensive service contracts brokered by Davis, including one to a firm called 3eDC. It was hired to develop a Web site and coordinate Internet services.

Davis has confirmed that he owns a stake in 3eDC. Over several months, McCain's campaign doled out payments to the firm approaching $1 million.

The 3eDC contract initially brought objections from top advisers, who argued that it smacked of self-dealing. After the summer campaign shake-up, it appeared that payments to the firm ceased.

But 3eDC resurfaced last month, days after McCain's advisers assumed key roles at the Republican National Committee. The RNC paid the firm $20,000 in late April. Rogers said Davis did not broker the RNC deal.

Political campaigns are largely unregulated operations in which millions of dollars flow over a period of months, and some inside deals are probably inevitable, said Robert Kelner, an election lawyer who has represented the RNC.

Instances where a campaign manager hires a vendor in which he is also an investor are more unusual, he said, and the practice should raise red flags. "A campaign caught self-dealing is going to suffer public relations damage for that," Kelner said.

Research editors Alice Crites and Lucy Shackelford and staff researcher Madonna Lebling contributed to this report.

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