Checkbook Diplomacy - Part Two
Big egos, big donations, big status
BY Stephanie Mencimer | August 12, 2008
When George W. Bush took office, the White House personnel director, Clay Johnson, was inundated with more than 1,700 applications from would-be ambassadors. And why not?
The salary may be relatively modest, but the job — at least at the choicest postings — sure has it perks: beautiful surroundings, domestic staff, the potential to hobnob with the elite. Ambassadorial residences are often located in choice real estate. For instance, Villa Taverna, the ambassador’s residence in Rome, is a restored 16th century villa that includes seven walled acres of gardens, making it the largest private park in the city. The compound, which takes up an entire city block, includes a movie theater and a swimming pool.
Not only that, being appointed an ambassador bestows status as close to aristocracy as an American can get, so ambassadorships are a powerful inducement for fundraising among the rich and powerful. “There are $32 egos and $32 million egos,” says Charles Manatt, chairman of the Democratic National Committee from 1981 to 1985 and ambassador to the Dominican Republic during the last 15 months of the Clinton administration. He says that some people who’ve been financially successful but don’t think they’ve gotten appropriate recognition covet the positions. There are lots of reasons people want to be ambassadors, he says, but for many of the big donors, “I think it’s an ego thing.”
The ego thing can be an expensive thing — of the 124 political appointments to foreign postings Bush had made as of January 2007, 53 went to people who had been “Rangers” or “Pioneers,” people who had raised or donated $100,000 or $200,000, respectively, to his campaigns. Appointments for sale are thus a major part of “the buying of the president,” the political marketplace that opens for business every four years, and the bidding builds as Election Day nears.
For all the glitter of an ambassadorship, it is also serious business. An ambassador, according to a State Department manual, “personally represents the president of the United States . . . directs all U.S. programs and personnel” and “carries ultimate responsibility for executing U.S. foreign policy goals and coordinating and managing all U.S. government functions in the host country.”
Nonetheless, in administration after administration it has only been a matter of time before a politically appointed ambassador stars in a scandal, embarrassing either our country because of inappropriate behavior abroad, the president who made the appointment, or both. Sometimes it’s money, sometimes it’s political ideology wrapped in insensitivity to the host country’s mores, and sometimes it’s sex. Franklin Roosevelt, for example, appointed physician Herman Baruch, brother of financier Bernard Baruch, as ambassador to Portugal, where his escapades with local women created a small scandal. That resulted in Baruch’s reposting to the Netherlands, where it happened again.
And the political appointees are a constant thorn in the side of the professional diplomatic corps.
“If you’re a career Foreign Service officer and your ultimate ambition is to reach the ambassadorial level, and you find that your opportunities are cut by 50 or 60 percent by virtue of political appointments at the ambassadorial level, you don’t appreciate the process,” Lawrence F. O’Brien Jr., an aide to Presidents John F. Kennedy and Lyndon Johnson, told an oral historian. “By the same token,” he added, “those in the White House haven’t any great concern about your lack of appreciation.”
According to a senior Foreign Service officer, the problem with letting inexperienced people serve as ambassadors is that many think their success in making money makes them good at everything else, and of course makes them better equipped to handle diplomatic tasks than the humble government employees in the Foreign Service. “A lot of them, if they’ve made a lot of money, they think they’re going to come in and fix things, and of course, they bungle it up,” says the officer, who, being diplomatic, declined to be quoted by name. “People in other countries are appalled that the Americans do it this way.”
Americaquest Mortgage Company founder Roland Arnall set aside $325 million for a predatory lending settlement the same day President George W. Bush nominated him for an ambassadorial post. (Department of State)Malcom Toon, a top career diplomat who served as ambassador to four countries, including the Soviet Union, from 1969 to 1979, declared in April 1982 that President Reagan was using U.S. diplomatic posts as “a dumping ground” for political donors and defeated GOP politicians. “We have a man in London who owes his place in life to the fact that his parents founded a furniture-polish dynasty. His only qualification for the job is that he speaks English,” said Toon, referring to John J. Louis Jr., a major GOP donor whose family founded S.C. Johnson Wax. Toon later complained to The New York Times — not so diplomatically — that some of Reagan’s appointees “have made us look like the laughingstock of the world.”
While some of Reagan’s donor-appointees were content to busy themselves with big- game hunting, others relished the opportunity to exercise their anti-government ideology. In 1981, on the recommendation of William F. Buckley Jr., the late conservative writer, Reagan named investment banker Evan G. Galbraith as ambassador to France. Galbraith had nothing but scorn for government employees — and not a particularly high regard for the socialist government of France, either. Galbraith publicly criticized the Foreign Service and advocated replacing all professional ambassadors with doctors, lawyers, and businessmen like him. He thought the Foreign Service was full of confrontation-averse liberals and that “ambassadors should be out there running an offensive game. The real role in a major embassy,” he told The New York Times in 1985, “is to be an effective spokesman for the president’s views.”
As such, during his tenure, Galbraith, a staunch anti-communist, went on French TV and called the communists in the government “poor Frenchmen who have gone astray.” His public comments frequently roiled the French, who were not too sorry to see him leave.
Perhaps the most egregious offender among President Clinton’s diplomatic roster was M. Larry Lawrence, the millionaire businessman whose fabricated stories of World War II service got him buried in — and later dug up from — Arlington National Cemetery. Lawrence donated $200,000 to Democrats in 1992 and raised millions more for the party. After Clinton was elected, Lawrence reportedly begged campaign officials for jobs in the new administration for both him and his wife, whom he wanted to be chief of protocol, hosting foreign dignitaries who visit the White House. Instead, Clinton named Lawrence to be ambassador to Switzerland.
His nomination drew bipartisan cries of opposition, with both Democratic and Republican members of the Senate Foreign Relations Committee insisting that he was unqualified for the job. At the time of his confirmation, Lawrence had more than a dozen cases pending against him in tax court, thanks to repeatedly under-reporting his income — by millions of dollars — to the IRS. He was later fined for breaking federal campaign-finance laws for exceeding a $25,000 ceiling on donations during the 1988 election cycle. And during his background investigation for the appointment, Lawrence told federal investigators that he would recuse himself from all issues involving money laundering — the foremost diplomatic issue for the State Department in Switzerland — because a business partner had gone to prison for laundering money — through Swiss banks.
Lawrence ultimately won confirmation, and he served almost two years abroad. After he died in Switzerland from complications of leukemia and a blood disorder, he was buried — at his earlier request to the State Department — in Arlington Cemetery, with Bill Clinton delivering the eulogy. But Republican researchers later discovered that he had never served in the Merchant Marine, as he had claimed, during the war. His body was disinterred and, at his wife’s request, moved to a California cemetery.
Not to be outdone by his predecessors, George W. Bush appointed Richard Egan, the billionaire founder of the EMC computer company, to be ambassador to Ireland. The appointment was made shortly before Egan invested $62 million in a sham tax shelter set up by the accounting firm KPMG, which was using Irish shell companies to help rich Americans avoid paying taxes. Egan left his post after only 15 months. He was never charged with a crime and has sued seeking the return of the $62 million, which was seized by the IRS.
And then there’s Roland Arnall, the founder of Ameriquest Mortgage Company, who, along with his family members, has raised and donated millions of dollars for Bush and his fellow Republicans — so much money, in fact, that he and his wife rank as the president’s biggest fundraisers. Bush sent Arnall to the Netherlands in 2005, around the time his company was facing investigations in 30 states of predatory mortgage lending practices that were forcing homeowners into foreclosure. On the very day Bush nominated Arnall as an ambassador, Ameriquest’s parent company announced it was setting aside $325 million for a settlement, finalized in 2006, of those claims.
Melvin Sembler founded a controversial juvenile drug rehabilitation program, raised big money for the Republican Party, and was appointed to ambassadorships by both Presidents Bush. (Department of State)Most of Bush’s ambassador appointments have stayed out of the news, despite, in many cases, their lack of credentials for the job. One exception is Melvin Sembler, a major Republican fundraiser who was appointed to ambassadorships by both Presidents Bush. The younger Bush initially picked him to head the Export-Import Bank, but he ran into financial conflicts and had to turn down the job. As a consolation, Bush sent him to Rome, a job as often as not given to Italian-Americans in recent decades.
Sembler, a Florida shopping center developer, began supporting the elder Bush for president in 1979 after meeting him in Tampa. Sembler worked on Bush’s ’88 campaign, was the finance co-chair for his inaugural, and, in ’89, was appointed ambassador to Australia. Since then, Sembler has been a major fundraising force in GOP political circles, serving as the finance chair of the Republican National Committee and raising money for the second Bush’s 2000 campaign.
Sembler’s appointment as ambassador to Italy was controversial and not just because of his political contributions. In the 1970s, he and his wife, Betty, had founded a chain of juvenile drug rehabilitation programs called Straight Inc. The “tough love” program, with clinics across the country, collapsed after 15 years amid lawsuits and run-ins with state regulators, thanks to allegations that kids in the program were being sexually abused, beaten, and illegally restrained. The program has been the source of TV and newspaper investigations, yet Sembler has pointed to the program with pride during confirmation hearings, frequently asserting that 12,000 kids were successfully treated.
Sembler said in an interview that the allegations about mistreatment at Straight Inc. are the product of a few disgruntled participants, and that he never would have been involved with a program that abused children. He also believes that the bad publicity has been ginned up by the drug legalization movement, which doesn’t like his continued anti-drug crusade.
Despite the bad publicity during Sembler’s second tour through the State Department, he won accolades from the embassy staff for his energetic and effective leadership. And his political connections — the source of much criticism leveled against him — have helped him succeed. In fact, Sembler’s experience shows why efforts to abolish politically appointed ambassadors have usually failed: They can sometimes get things done that the Foreign Service can’t.
Before being posted to Rome, for example, Sembler read an inspector general’s report that urged that three buildings on the property were vulnerable to car bombs and should be shut down.
Upon arriving in Rome, Sembler inspected the buildings and discovered that, in the event of a problem, there was only one way out. One building, which the State Department had been renting for 15 years, had no fire escape; in case of emergency, employees would go out a window, where the government had installed a platform with stairs that led into a tiny courtyard completely enclosed by other buildings. If you were trapped there, Sembler says: “The State Department had an answer to that. You had a box. Inside was a sledgehammer, a hard hat, and asbestos gloves. So if you get trapped you take the sledgehammer and you try to go through someone else’s building.”
Sembler says the security concerns about these satellite buildings prompted the State Department to draw up plans to relocate 200 staffers into the main embassy. But after a year of study, the architect couldn’t figure out how to make all those people fit into a building that was already “packed to the gills,” Sembler says. So he started negotiating to buy the building adjacent to the embassy, and was finally able to knock the price down by $25 million. Sembler brought congressional appropriators to Rome to look at the security concerns and to persuade them to allocate money to buy the building.
“A Foreign Service officer would probably have been run out of the service if he had done what I did,” Sembler says, explaining that new ambassadors are given specific instructions not to approach Congress about their problems. Ambassadors are supposed to work through the chain of command at the State Department. “I tried that,” he says, and it didn’t work, so being a seasoned real estate developer, he started negotiating with the building owner on his own. “When we got the new building,” he says, “we were able to cancel the leases on three other buildings, at no cost to the government.” Even so, the $83.5 million acquisition was not without controversy: A friendly member of Congress from Florida amended an appropriations bill to name the annex “the Mel Sembler Building,” an unprecedented — and some said, unseemly — honor for a sitting ambassador.
Ambassadorships offer all the perks of public service without most of the headaches that come with actually running the government. “Would you rather be an ambassador or would you rather be a [Cabinet] secretary?” Sembler asked, noting that the reward these days for public service is often a subpoena or criminal investigation.
“It’s a great title,” says Sembler, who points out that “ambassador” is one of the few titles that protocol allows people to keep using even after they’re done serving. “It’s a wonderful job. You’re the president’s personal representative. You’re away from the United States, so you have the authority of the president …. You’re running something.”