Bill Cohen and the making of a Beltway whore

Yep, that is strong … but it bothers me to no end those who will crucify their underlings for having the wrong word or thought on the grounds of “appearance of impropriety” and always expect unimpeachable behavior and relationships – and then do the exact opposite thing.

Let me say this. I first met Bill Cohen when he was a Senator. A nice, quiet guy from a nice quiet state. I met him again when he was SECDEF. Still a very nice, quiet guy. Danced kind of funny on the Big E, and I wondered why he brought his new wife on official travel with him all the time - but a nice guy. He is not, perhaps, Duke Cunningham – but it may be defined as only a matter of degree. The point isn't that he is a bad person - I don't know - as a person I liked him. Though the priorities of the Administration he went to work for in'97 and did nothing to change were, well, a cancer. The issue is does he meet the standards he expected of those he led as SECDEF.

Let us hope that the info in this NYT bit is all wrong. Irony or ironies; he lectures on ethics in government.

This story from David S. Hilzenrath in the Washington Post may have its facts all wrong, and “whore” is a strong word – but there it is. I would call this a cautionary tale – a tale about a good, solid man who was lured by the sickingly sweet rot that comes from money, power, and connections. Read the whole thing, and you will hear a bit from Zbigniew Brzezinski who gets it. Take a deep breath, and let’s wade into the fever swamp.

When the motorcades and military escorts ended in January 2001, his final financial disclosure form listed tens of thousands of dollars of charge-account debts at interest rates as high as about 25 percent.

Within weeks of leaving office, he was living in a $3.5 million McLean mansion with a swimming pool, a cabana and a carriage house.

Cohen's career had entered a classic final phase: the monetizing of the public man.

Public servant?

"We Specialize in Access, Insight and Intelligence into the Defense Industry, DoD and Government programs," the Web site ( the Cohen Group , ) for a Cohen investment advisory service said until recently. The Web site said the Cohen Group's "Competitive Advantage" included "Senior level relationships throughout industry and government."

Nice spin.

In the world of gambling, the Cohen Group has teamed with a developer seeking to convert a former U.S. Navy facility overlooking San Francisco Bay into an Indian casino and resort. The project would need support from the Bureau of Indian Affairs, and Cohen knows the terrain. He headed a Senate panel on Indian affairs.

Sniff. BRAC? Sniff.

In December 2000, shortly before Cohen left office, the Pentagon awarded Iridium Satellite LLC a $72 million contract , without competitive bidding, that helped save the company's communications satellites from destruction. David R. Oliver Jr., who was a senior procurement official at the time, said that he and Cohen were the Pentagon's principal advocates for the Iridium deal.

Over the past two years, Iridium has paid the Cohen Group about $400,000 to lobby the House, Senate and Department of Defense, according to lobbying disclosure statements.

"Several months after Secretary Cohen left office, The Cohen Group was contacted by the Chairman of Iridium to assist with marketing to several government agencies including DoD, as well as foreign governments," Tyrer said in writing. "Obviously, we had no such discussions while in office."

Oh yes, that clean, nice BRAC. Sniff.

When he was defense secretary, Cohen fought for base closings to save money for weapons. Last year, the Cohen Group helped Arlington County save some of the military jobs slated for relocation in the latest round of base closings. It helped Jacksonville, Fla., emerge from the same round of base closings with a net gain in defense jobs.

"In part they helped us get behind the curtain," said Susie Wiles, a spokeswoman for Jacksonville's mayor. "In part they were able to access people who would not have been available to us."

Jacksonville paid Cohen's firm $490,000 over seven months. In its application for the Jacksonville contract, the firm cited Cohen's "personal and professional ties to the BRAC Commissioners," a reference to the Defense Base Realignment and Closure Commission.

In response to Jacksonville's request for examples of the firm's "professional accomplishments," the Cohen Group said it helped Lockheed win a $3.6 billion contract in Europe. The contract was for the sale of F-16 fighter jets to Poland, financed by the U.S. government.

"TCG's mission was to secure U.S. Government support for the deal, and U.S. approval of novel export financing to facilitate the procurement," the Cohen Group said in its proposal to Jacksonville. The Cohen Group's effort included "advocacy with key decision-makers in the White House, Office of the Vice President, National Security Council, Department of Defense and the State Department during an 18-month campaign," the proposal said.

Now, lets get in up to the top of our chest waders. This speaks for itself. First, in another window, I want you to open up this timeline. Look it over. Review when necessary. Here is a series of quotes.

...charge-account debts of $65,005 to $180,000. ... Despite the financial strain, Cohen said that during his final year in office he and his wife were working on blueprints to build a house in the Woodlea Mill section of McLean. ... Cohen said he called Frank G. Zarb, who then was chairman of the Nasdaq Stock Market, after hearing that Zarb was preparing to sell a house in Woodlea Mill. Instead of putting the house on the market, Cohen said, Zarb sold it to Michael S. Ansari, chairman and chief executive of defense contractor M.I.C. Industries Inc.

Ansari and his wife paid $3.5 million for the house in October 2000, according to land records. The Cohens moved in during January or February of 2001, Cohen said. ... A real estate broker who worked with Zarb, Caroline Rocco, said that as far as she could tell, "it was the Cohens who wanted the house, and how they went about, you know, buying it is their business."

The Cohens did buy the house eventually, paying $3.6 million for it in April 2002, according to land records. ... Ansari, who canceled an interview scheduled for this report, sent a written statement saying the property "was of longstanding interest to me."

"When I learned that it might be put on the market, I acquired it as a sound investment and paid the seller's price of $3.5 million," Ansari said. (18 months and you only made 1.1% in one of the hotest markets in the country?) ... The arrangement with Ansari prevented the McLean house from slipping away, and it made it possible for Cohen to live in the house before he had the means to buy it. It also spared Cohen a potential bidding war for the property. ... Cohen went on to join the board and audit committee of the Nasdaq Stock Market, and, in a January 2001 news release, 11 days after Cohen left office, M.I.C. announced Cohen's appointment as chairman of its board of advisers.

Executive Summary: This is how the game is played.

- Cohen is SECDEF and ends his tour deep in high interest credit card debt.
- He wants a house that he cannot afford that belongs to the Chairman of NASDAQ (Zarb) – an exchange that has A LOT of Defense Contractors on it.
- Defense contractor (Ansari) buys house from Zarb for $3.5 million and holds it, unoccupied, for 3 months until Cohen leaves office. Cohen rents the house and goes to work for Ansari less than two weeks after he leaves office.
- Cohen also starts to work (in parallel) for the original owner of the house, Zarb.
- Cohen buys house ($3.6 million) 18 months later from Ansari for only ~2.9% ROI and a rate of return of 1.9% for Ansari. In McLean VA.
- Cohen sells house ($4.0 million) 14 months later for ~11.1% ROI and a rate of return of 9.8%. Use this calc if you want.

I ask the question: should this be considered a healthy thing to happen in a Representative Republic? Is it any wonder CNOs do what they do? Like I said before, all this info could be wrong...but it looks well researched. If so, I will publish a retraction - but for now the title of the post stands.

NB: David S. Hilzenrath will be online to discuss former secretary of defense William Cohen on Wednesday at 1 p.m. ET. I think I will be there.......