McDonnell says he didn't know of Fred Malek's Nixon work, SEC settlement

Frederic Malek
Frederic Malek (Bill O'Leary - The Washington Post)
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By Rosalind S. Helderman
Washington Post Staff Writer
Wednesday, May 26, 2010

RICHMOND -- Virginia Gov. Robert F. McDonnell (R) said Tuesday that when he selected businessman Fred Malek to chair a government reform commission, he didn't know Malek had played a controversial role in the Nixon administration and more recently paid a $100,000 civil fine related to his firm's work with Connecticut's pension fund.

As an aide to President Richard M. Nixon, Malek in 1971 compiled a list of Jews in the Bureau of Labor Statistics at the president's request, an action that has been the subject of numerous articles and for which Malek has repeatedly apologized. Malek's 2004 fine in the pension case came as part of a settlement with the Securities and Exchange Commission in which he acknowledged no wrongdoing.

In a radio interview, McDonnell defended his choice of Malek, a former president of Marriott Hotels and Northwest Airlines and a longtime national Republican activist, as the kind of leader needed to find ways to make government run better.

"I did not know about this background. But it was 40 years ago -- he made a mistake; he's apologized for it," McDonnell said of the Nixon history on WTOP's "Ask the Governor." "When I'm looking for somebody to be a leader in a government reform effort to try make Virginia government work better, I want a successful businessperson. . . . People who know him and have worked with him believe he is a significant force in American business."

Some Jewish leaders have stepped forward to defend Malek, saying they have accepted his apology. But some Democratic elected officials have called on him to step aside, and on Tuesday expressed skepticism about McDonnell's statement that he did not know Malek's background.

Sen. A. Donald McEachin (D-Richmond) called the claim "absolutely stunning and, frankly, beyond belief."

In the interview, McDonnell said he has personally known Malek for five or six years and respects his character. Malek served as campaign manager for President George H.W. Bush's reelection effort in 1992, was finance chairman for the presidential campaign of Sen. John McCain (R-Ariz.) and has been a close adviser of former Alaska governor Sarah Palin (R). He gave $26,000 to McDonnell's campaign and $25,000 to his political action committee just days after he was appointed to head the reform panel. McDonnell said Malek is a longtime, consistent supporter.

Malek has given more than $220,000 to Virginia Republicans since 1996, according to the Virginia Public Access Project, including contributions to three GOP gubernatorial candidates before McDonnell.

The governor said that he had not reviewed Malek's SEC fine closely but that longtime business leaders often face such "regulatory violations."

"Whatever he did, obviously there appeared to be some violation of the law that he agreed to settle," McDonnell said. "I don't know all the details, but I will say what's important to me is that when I go about restructuring government, I want people who are proven leaders, reformers, change agents who know how to get it done."

Malek and his Washington investment firm, Thayer Capital Partners, paid $250,000 in fines.

The SEC said his firm, which managed $75 million of Connecticut's pension fund, failed to disclose thousands of dollars in payments to a state senator who performed "no meaningful work" and was hired at the request of the state treasurer. During negotiations over the investment, the SEC said, the treasurer, Paul J. Silvester, told Malek it would be helpful, though not required, if Thayer hired the consultant.

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