Glendening Aids Firms, Gets Funds
Washington Post Staff Writer
Wednesday, October 21, 1998; Page A01
Staples Inc., the Massachusetts-based office products retailer, got a favor in 1996 from Maryland Gov. Parris N. Glendening's administration: $2.7 million in grants and low-interest loans to help build a distribution center in Hagerstown.
A few months later, Lt. Gov. Kathleen Kennedy Townsend called Staples' chief executive officer and asked for money for the Glendening-Townsend reelection campaign. He responded, in a big way: $6,000 from his pocket, $6,000 from his company and a total of $4,000 from seven of his top executives or their spouses, all of whom live in Massachusetts.
Staples isn't the only company that gave generously to Glendening's campaign before or after receiving "Sunny Day" loans or grants, which the administration hands out to companies promising to create jobs in the state. Nearly a third of the 60 firms that have accepted Sunny Day packages or their corporate officers have contributed to Glendening's campaign.
Northrop Grumman Corp. received a $12 million package in September 1996, and within 16 months the company and a top executive sent $9,500 to the Glendening campaign. Integrated Health Services and its chief executive gave Glendening's campaign $9,000 after the firm received a $2.5 million Sunny Day grant. And Glendening (D) has received $33,800 $19,700 for his 1994 campaign, and $14,100 for 1998 from the owners and associates of a Hyattsville company that received a $1.5 million below-market-rate loan from the Sunny Day fund in 1996.
Meanwhile, some companies with Maryland contracts, especially construction firms, have given generously to Glendening's Republican opponent, Ellen R. Sauerbrey, who has said she would spend more money on highway building. MacKenzie Contracting Corp., of Lutherville, is doing work at three state colleges, and its officers gave $5,950 to Sauerbrey.
Bill Marriott, chairman of Bethesda-based Marriott International, has raised thousands of dollars for Sauerbrey by arranging a fund-raiser on her behalf featuring former president George Bush. Marriott general counsel Joe Ryan has given Sauerbrey $4,000 and is chairman of Sauerbrey's Montgomery County finance committee. Marriott companies have more than $17 million worth of state contracts to provide property management and hospitality services.
Such donations, which are legal and commonplace here and elsewhere, offer a window into how politics and business can interact in Maryland. All of the donors and politicians interviewed for this article said no favors are expected or given because of campaign contributions. People give money, they said, because they support a candidate's overall philosophy and policies.
But the magnitude of the giving shows how the governor of Maryland, whose constitution creates one of the nation's most powerful chief executives, is well-positioned to benefit politically from the array of companies that compete for state grants or vie for favorable regulatory treatment. Even if donations don't buy government decisions, corporate representatives say, they sometimes make it easier to get phone calls returned, and it's possible they can help in more subtle ways.
"You don't want to be sitting there as a losing player in politics and wondering what you could have done to get that final edge," said Gerard E. Evans, a major Democratic fund-raiser and a lobbyist for several Maryland corporations.
Glendening has unapologetically sought donations from firms doing business, or hoping to do business, with the state. He said companies and executives give to his campaign because they "are very happy with how strong the economy is. . . . Obviously some of the support comes from companies that we work with on the Sunny Day fund. . . . Good public policy is good politics."
Robin Oegerle, Glendening's campaign treasurer, said it's no surprise that state contractors and Sunny Day recipients have been asked for money, because the campaign tries to solicit every business in Maryland.
"If they do business in the state of Maryland," Oegerle said, "I'm sure they've been called."
Officials responsible for the Sunny Day fund said economic benefits for the state not politics determined which companies would receive assistance. But they expressed surprise at the size of the donations from some of the companies.
James T. Brady was Glendening's economic development secretary when most of the Sunny Day money was distributed, but he's now supporting Sauerbrey. The large donations from Sunny Day recipients, he said, are "news to me. I steadfastly stayed out of anything to do with campaign fund-raising.. . . Some of the amounts are rather staggering. I mean, $22,000 from MCI?"
One ill-fated Glendening fund-raising episode has been well publicized, but its lesser-known details illustrate the way state business and campaign contributions often coincide in Maryland.
In 1996, Glendening took a corporate jet to a 60-person, $1,000-a-ticket fund-raiser in New York, later saying he didn't realize the host's company, Merit Behavioral Corp., was bidding on a large state contract. His campaign ultimately rejected the money and reimbursed the host for the airplane ride.
In seeking the 1996 contract, Merit Behavioral Corp. followed the three-step strategy that's typical of some companies trying to win a Maryland contract: hire a lobbyist, schedule a meeting with administration staffers and schedule a fund-raiser or make a contribution to the governor.
"My feeling was that this was a fund-raiser for the governor to introduce him to out-of-state people who have existing or potential interests in Maryland," said Ira C. Cooke, Merit's Annapolis-based lobbyist, who escorted Glendening to the New York event. "And it was perfectly appropriate."
Because Maryland doesn't require campaign contributors to list their occupations, it's virtually impossible to know the precise extent to which contractors like Merit are giving to gubernatorial campaigns. But a Post analysis of campaign finance records and government reports shows that dozens of companies have made substantial contributions before or after winning state licenses, grants or contracts worth millions of dollars.
For example, five top officers of Helix/Medlantic, whose subsidiaries have $124 million in Maryland contracts for treating Medicaid patients, gave the governor's reelection campaign $7,500. Officers of Dimensions Healthcare System, which has $48 million in similar state contracts, gave the campaign $7,900.
Glendening also received $22,450 from top officers and the political action committee of Washington-based MCI Telecommunications Corp., which has Maryland contracts worth $2.6 million a year. MCI also received, but later rejected, a Sunny Day loan.
Most of these businesses won their contracts through a competitive bid process that gives the final decision to the three-person Board of Public Works: the governor, state treasurer and comptroller. But some major funding packages are won through a less formal process, with more room for subjective judgments by members of the Glendening administration.
The Sunny Day fund is the governor's most flexible, unstructured way to help a private business. It was created by Glendening's predecessor, William Donald Schaefer (D), as a way of helping the state compete for companies thinking of either leaving or locating in Maryland.
Glendening dramatically boosted the Sunny Day funding he inherited in 1995, to $20 million annually from the original $3.5 million. He plans to boost it further, to $30 million a year. Altogether, Glendening's administration has awarded $97 million in Sunny Day grants to about 65 companies, although a half-dozen offers were later withdrawn. Altogether, officials say, the companies have added-or pledged more than 12,000 jobs and invested at least $1.5 billion for new facilities.
In most cases, major Maryland companies approached the administration, seeking Sunny Day support for agreeing to expand in the state, officials said. To qualify, a company must offer "an extraordinary economic development opportunity," a term subjective enough to cover many requests. Applicants also must invest at least five times the amount of the Sunny Day appropriation. A committee of legislative leaders has the final say, but it has never rejected a Glendening proposal.
Some Republican legislators have tried to kill the Sunny Day program, calling it corporate welfare for the administration's political friends.
"This is the program that has cost the Maryland taxpayers almost $100 million," said Del. Robert L. Flanagan (R-Howard), the House minority whip. "The nightmare scenario is that the $100 million goes to raise $30,000 or $40,000 for the Glendening reelection campaign. . . . The money really goes to whomever the governor wants it to go to."
The General Assembly this year rejected a measure by Del. Raymond Beck (R-Montgomery) that would have barred gubernatorial campaign contributions from Sunny Day fund recipients.
"It will become law someday," Beck said. "It's a really bad idea, collecting campaign donations from people who get Sunny Day money."
Northrop Grumman, which gave $7,500 after receiving a $12 million package, said in a statement: "The company's long-standing practice has been to support state and local elected officials who recognize the value of a healthy and growing business community to the region's overall economic well-being. Governor Glendening's administration has been active in fostering this business-friendly environment..."
The story of Staples, which has 25 stores in Maryland, illustrates both the corporate and political aspects of some Sunny Day transactions.
In the summer of 1996, Staples was looking at Maryland, Virginia, West Virginia and Pennsylvania as possible sites for an 840,000-square-foot "automated warehouse distribution center." Glendening and Townsend met with Staples officials in Baltimore, where Townsend hugged Thomas Stemberg, the company's top executive and her former Harvard University schoolmate, according to Glendening.
To lure the project to Hagerstown, Glendening's team offered $2 million in low-interest loans plus $700,000 in loans that would be forgiven if Staples created the 700 new full-time jobs it promised. A few months after Staples accepted, Townsend was planning a campaign fund-raiser.
"I called them up and said, 'Would you contribute?'" she said in an interview.
In June 1997, the first of eight top officers in Staples Inc.'s headquarters in Framingham, Mass., began making donations to the Glendening-Townsend campaign that eventually would total $10,000. Of that, $6,000 came from Stemberg. The corporation also gave $6,000: $4,000 in October 1997 and $2,000 last June.
The Stemberg and corporate contributions approached Maryland's legal limits. State law allows an individual or company to give no more than $4,000 to a state candidate in a four-year election cycle, or $8,000 to a two-person ticket running for governor and lieutenant governor.
Staples spokesman Dan Kaferle said his company and its top officers gave generously to Glendening's campaign because "we feel the governor and his running mate have provided a very good atmosphere for companies to grow and operate in."
Townsend said she generally calls people "who are friends and family. ... I do not call from a business list of people doing business with the state."
James D. Fielder Jr., the current secretary for economic development, said that Sunny Day decisions are made with no regard to politics and that he was unaware of the large campaign contributions from Staples and other recipients.
"I would like to think that there is no connection," Fielder said.
Metro Resource Directors Margot Williams and Bridget Roeber, staff writer Scott Wilson and staff researchers Sharon Fanning and Jessica Medinger contributed to this report.