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Taking Stock of Bob Graham

Brian Stauffer

Doodle sings:

"We have a friend in Bob Gra-ham,

That's what everybody's say-in,

All across the good ol' USA.

From the Atlantic to the Pacific,

We all say -- he's terrific.

That's why America needs

Bob Gra-ham to-day."

The Democrats in the large Iowa warehouse met the song with eerie silence, then nervous laughter and unsure applause. Florida Sen. Bob Graham -- who told the crowd of 500 that they could feel free to call him "Doodle," as his ten grandchildren do -- then walked off the stage to mingle with those who attended the June 8 rally for Democratic presidential candidates.

It was an awkward moment to cap off a rather rambling, ineffective speech. Instead of endearing voters, the canary act, which includes a CD titled Bob Graham Charisma Tour 2004, revived questions about the senator's sanity first raised in 2000, when his strange habit of peppering daily diary entries with ludicrously quotidian details became known. The New Republic magazine asked the question, or answered it, perhaps, in a June 11 article titled "Crazy Bob," which gave the presidential candidate this bit of indirect advice: "Someone needs to take Graham aside and gently explain that Americans like their politicians colorful, not crazy."

It's not just his singing and note-taking that has some thinking he's a loon. The conservative National Review Online recently ran a small piece headlined "Piling on Sen. Graham as a Nut" that claimed he'd become "unhinged in his rhetoric" concerning tax cuts.

And back in May, the Washington Post Magazine ran a cover story about Graham titled "The Scariest Man in Washington." Writer Michael Grunwald detailed a Senate floor speech Graham gave last October about the terror threat to the United States, during which his "cherubic face turned purple" and he "gesticulated like a manic third-base coach." Grunwald went on to compare him to a "screaming-banshee Chicken Little."

Graham may be a strange character, but he hasn't gone poppies; he's just going populist. It worked for him back in 1978 during his unlikely -- and wildly successful -- gubernatorial run. Long before Graham seemed to have gone crackers, he was busy playing a cracker. It wasn't false advertising; Graham was the real deal, a white, rural Florida native with a genuine Southern accent who knew how to handle a calf.

(He's now part cow himself, in fact. During his recent heart surgery, doctors replaced one of his heart valves with one from a Holstein cow. There's a song about it on the CD that includes the line: "Oh, I'll forever have a Black and White friend/ Close to my heart." Seriously.)

But there was always a hint of schizophrenia wafting in the air around him, since he was also Harvard-educated, very rich, and oh-so-plugged into Washington. (His late brother owned the Washington Post, and his nephew now runs it, for crying out loud). Yes, Doodle has a little dandy in him.

And he has combined the two poles of his nature as a perfect Florida political hybrid, a mix of the countrified and the cultured, the genuine and the gentrified, a fellow who can attract those living along Interstate 4 in the conservative heart of the state as easily as the die-hard Democrats along Interstate 95 in his native South Florida.

Considering this duality, it's no wonder Graham's life in office has been full of contradiction: He paints himself as a savior of the Everglades while maintaining a cozy relationship (worth hundreds of thousands of dollars in campaign contributions over the years) with its destroyer, Big Sugar. He courts doves by touting his vote against the Iraq War while supporting even more radical military strikes in Syria and Iran. He plays the nature lover who glorifies raw Florida, though his family business, the Graham Companies, has paved many square miles of wetlands, especially in Miami Lakes, the place he calls home. He adamantly opposes oil drilling in the Gulf of Mexico while infuriating environmental groups with his strong backing of the nuclear energy industry.

In a bid for the rural vote, the 66-year-old Graham has been casting himself on the campaign trail as a "serious farmer." But he is, of course, more a Capitol Hill good old boy than a regular old country boy. His wealth alone, estimated at more than $8 million, would seem to preclude him from playing, with a perfectly straight face, the role of Everyman. And a close look at his financial disclosure forms for the past two years shows that his pursuit of money sometimes conflicts with his job as public servant. At times, it's hard to tell who really has a friend in Bob Graham, constituents or corporate interests.  

Most of his net worth is in citrus, cattle, and real estate. A sizable chunk, perhaps a few million dollars worth, is held in stocks, mutual funds, bonds, and other financial instruments. Of that, as much as $1.75 million is in individual stocks, according to his financial disclosure forms. Though it's his money, all the stocks are in the name of his wife, Adele, a homemaker and former volunteer school tutor. The grandkids call her Deedle.

For years, the Grahams have speculated mostly in major companies like Coca-Cola and Microsoft, along with health care firms. But in 2001, their portfolio shifted to the energy and oil markets, where they invested $34,000 to $145,000 in seven companies that include three nuclear energy concerns as well as Vice President Dick Cheney's former firm, Halliburton.

That latter purchase, made shortly after the September 11 terror attacks, likely won't endear Graham to Democrats in Iowa or anywhere else. Nor will his investments in Duke Energy, a company involved in the California energy crisis. But what really makes his stock trading intriguing is that he's a veteran member of the Senate Energy and Natural Resources Committee who crafts and votes on legislation that directly affected the companies on which he was betting.


On March 18, 2001, a Sunday front-page special report ran in the Washington Times headlined "Energy needs spur rebirth of nuclear power." It told of the industry's imminent revival and newfound political support among a handful of Democrats in the U.S. Senate. Among the converts was Florida's Graham, who was quoted as saying, "Nuclear power is not a magic bullet, but it should also not be a poison pill.

"The technology exists to make nuclear power -- already one of our cleanest energy sources -- also one of our safest, most reliable, and least expensive."

The Washington Times also reported that Chicago-based Exelon Corp., the nation's top nuclear energy producer, was developing new nuclear technology in South Africa that it planned to bring to the United States.

In the same month, Graham co-sponsored the Nuclear Energy Electricity Assurance Act, an industry-backed bill designed to encourage expansion of nuclear power after 20 years of stasis. The measure, which included large incentives and subsidies to nuclear companies like Exelon, had been introduced in the Senate to the chagrin of environmental groups, one of which complained that Congress was "slopping the nuclear power hogs yet again."

Three days after the story was published, Graham's wife bought between $1,001 and $15,000 worth of Exelon stock, according to his financial disclosure form. (Amounts are listed in broad financial ranges on the forms, and Graham's camp refuses to release the actual numbers.)

That wasn't all: On November 5 of the same year, he bought $15,001 to $50,000 in Duke Energy, a North Carolina-based company that owns two nuclear reactors. And he already owned $1,001 to $15,000 in a Texas-based energy company with nuclear interests, TXU, since at least the early 1990s.

The stock buys weren't the senator's only financial connection with nuclear power players. From 1998 to 2002, he received $46,287 in PAC contributions from nuclear companies. During his 1998 campaign, when he really needed the money, Graham ranked sixth in the Senate in contributions from nuclear industry PACs, raking in $28,787 during that year's election cycle, according to the Washington, D.C.-based consumer lobby group Public Citizen.

The single largest nuclear industry contributor to Graham's campaign was Exelon, which has provided him with $19,000 since 1998. Exelon, in fact, is a particularly generous donor, giving a total of $588,044 to members of Congress in 2002 alone. That makes it the kindest nuclear company to politicians, according to a Public Citizen report issued this past May 20 titled "Hot Waste, Cold Cash." Duke was ranked seventh, with $376,000, and TXU was sixth, with $394,828.

In total, nuclear companies contributed some $5.8 million to members of Congress during the 2002 election cycle, Public Citizen reported.

One of the industry's chief goals -- and a key reason it lavished so much money on politicians -- was to persuade Congress to designate Yucca Mountain, located in the Nevada desert 100 miles northwest of Las Vegas, as the nation's chief repository for nuclear waste.

Environmental and consumer groups fought the proposal, noting that dangerous, potentially catastrophic radioactive sludge would be transported to the mountain from points around the country, including Florida, raising the possibility of a "mobile Chernobyl."

Industry backers like Graham countered that nuclear energy was relatively cheap and clean-burning, which he says could help stem the tide of global warming. Graham has even taken to playing Chicken Little (though not quite a screaming-banshee one) on the issue, warning that global warming will cause catastrophic floods in Florida if the country doesn't produce more nuclear power.  

The Yucca Mountain bill was paramount to the industry; only with a yes vote could the industry grow. Most Senate Democrats fell on the anti-nuclear side. Graham, who had backed the idea of a centralized national nuclear waste dump for years, was one of 15 who sided with Republicans in a 60-39 vote to pass the bill. On July 9, 2002, Graham issued a press release explaining his choice: "The nation needs a permanent disposal site for nuclear waste. Currently, we are accumulating spent fuel on site at our nuclear reactors and other facilities. In Florida, that means we have radioactive waste sitting in our backyards at three clusters of facilities -- Crystal River, Turkey Point, and St. Lucie."

Yet Florida will still have to store more than 1,000 metric tons of nuclear waste even after thousands of tons are shipped to Yucca. By the Energy Department's own estimates, there will be just as much nuclear waste, even with Yucca Mountain in use, at sites around the country in 2036 as there is today.

"A repository for nuclear waste at Yucca Mountain will not solve the problem in Florida," says Lisa Gue, a policy analyst for Public Citizen, which was founded by activist and former left-wing presidential candidate Ralph Nader. "Sen. Graham's commitment to the nuclear industry is no doubt enhanced by the companies' generous contributions to his election campaign. His vote on Yucca Mountain was a big disappointment but not necessarily a surprise."

When told about Graham's investments in Exelon, Duke, and TXU, Gue adds, "It certainly does raise the specter of potential conflict of interest... Politicians are there to protect their constituents and not to protect their shareholder interests."

Shareholders, including Graham, lost money anyway. He bought the stock on March 21, 2001, when it was selling at about $60 a share. He sold it on November 5, 2001, a day that saw it close at $43.75 a share -- more than a 25 percent slide.

He might have done better financially to hold onto it. Today, it's back up to around $60.


So Graham owned as much as $80,000 worth of stock in the nuclear industry while he was promoting it on Capitol Hill. What of it?

"If he's buying energy stock while he's sitting on the committee, that sounds shady to me," says Geoff Ward, a legislative associate with Common Cause in D.C. "It's definitely on the dark side of a gray area."

Despite several interview requests, Graham wouldn't comment for this story. But his campaign's communications director, Steve Jarding, spoke about it, and the campaign sent a ten-page written response to New Times' findings. The unsigned memorandum claims that only Mrs. Graham controls the Northern Trust stock account. It also alleges that Northern Trust made trades without her permission and backs up that assertion with a June 13, 2003, letter (sent after New Times' initial query of the campaign) from Northern Trust Vice President David Kamons addressed to Adele Graham. "We will continue to exercise our discretion as to security selection and the timing of security trades," Kamons wrote in the letter. "As in the past, we are choosing stocks and bonds to purchase or sell based on the bank's research inputs and policies, without your prior notification or approval."

As for the Exelon purchase, the campaign vehemently denies that the Grahams were trying to profit from the senator's legislative agenda. "The timing of the purchase had nothing to do with the [Graham-sponsored] bill introduced that month in the Senate or the Washington Times story on how that bill would be a boon to the nuclear industry," the campaign claims in its response. "If that was the case, the Grahams most certainly would have started purchasing other nuclear energy stocks within the same period -- they did not do so."

The Grahams, however, did buy Duke stock later that same year. The response also mentions that Adele Graham bought and sold several stocks on the same day as she bought Exelon.

The senator should be happy he's not elected to state or local office; most are governed by laws forbidding elected officials from having a financial stake in any business they regulate. Last August, for instance, an ethics panel forced New York Mayor Michael Bloomberg to sell $45 million in stocks because some of the companies did business with the city.

Federal law holds executive branch officials to the same standard. For instance, Defense Secretary Donald Rumsfeld recently recused himself from any Pentagon meetings in which HIV/AIDS was discussed because he owns stock in a company that is marketing antiviral medication.

Not so in Congress. Ethics rules forbid members from using their legislative power to advance their financial interests or those of a "limited class" of people to which they belong, according to the Senate Ethics Manual. Previous Senate Ethics Committee rulings, however, have greatly narrowed the meaning of those words, and stockholders are generally not considered to be a "limited class."  

There are many loopholes. For instance, one precedent cited in the ethics manual holds that a senator may back legislation that personally benefits him significantly, "but if it also has a broad, general impact on his state or the nation," then the law doesn't apply. That's one even a less-than-sly senator could drive a nuclear waste truck through.

In general, the Senate Ethics Committee has taken a laissez-faire attitude. One precedent is that committee members should have faith that elected representatives act on behalf of the "public interest and public good, not on personal pecuniary interest."

This may sound naive, but it's really self-serving.

"Senators regulate themselves, and they don't want the ethics committee to be a tough body," Common Cause's Ward says. "The committee grants senators great leniency when people outside of Washington would say this is not right."

Stock scandals have broken out occasionally in Congress, most notably in the case of current Senate Majority Leader Bill Frist. In 1999, Frist helped defeat the Patients' Bill of Rights while owning several million dollars worth of stock in his family's health care business, Columbia/HCA (which has a history of fraud and corruption). Other than some bad publicity, Frist never paid a price for this apparent indiscretion.

In its defense, Graham's camp points to two fellow senators and presidential candidates, John Kerry and John Edwards. Kerry, whose wife, Teresa Heinz, is heir to the ketchup fortune, owns stock in several energy companies, as does Edwards. But neither Kerry nor Edwards is a member of the Senate Energy and Natural Resources Committee.

"It's ridiculous to make an issue out of it," Jarding admonishes. "Do you expect every member to sell all their stock?... You and I may not agree with the [Senate Ethics Committee], but they create the standards, and Sen. Graham is adhering to those."

When it was suggested that members of Congress should divest themselves of stocks in companies that are affected by their committee memberships, Jarding said, "Literally every member on [the Senate Energy Committee], or almost every member, owns stock in energy companies."

That's a bit overstated. Of the 22 members, six others -- Mary Landrieu (D-Louisiana), Jeff Bingaman (D-New Mexico), Jon Kyl (R-Arizona), Don Nickles (R-Oklahoma), Craig Thomas (R-Wyoming), and Gordon Smith (R-Oregon) -- hold energy stocks, according to financial disclosure forms filed last year. Of them, Kyl had the largest holdings (including ownership in Exelon and Duke Energy), while Smith had the smallest (with $15,001 to $50,000 in Marathon Oil).

Government watchdogs like Ward would like to see stricter ethical rules that would end conflicts between the "public good" and stock profits, but they know it's a long shot. Congress has a long and hallowed history of looking the other way in such matters.

In the Capitol Hill publication Roll Call, two congressmen, Bernie Sanders (I-Vermont) and Maurice Hinchey (D-New York), wrote a 1995 guest editorial about stock-ownership conflicts in Congress headlined "Divest Now! Members Should Purge Stock Portfolios of Conflicts."

"Hardly a week goes by in the 104th Congress without new revelations about some Members voting in committee or on the House or Senate floor on matters in which they hold personal stock holdings or other financial interests...," Sanders and Hinchey wrote. "Little wonder that many Americans have come to believe cynically that Members of Congress take care of themselves first and the people's business afterward."

Nothing has changed, which means that Graham will likely skate ethically for his stock buys. But he may pay politically.


At another Democratic presidential forum in Iowa, this one on May 17, moderator Gerald McEntee, an AFL-CIO official, asked: "Halliburton and Bechtel corporations, with high connections to current and former Bush administration officials, are making hundreds of millions of dollars already in Iraq. How would you prevent this kind of war profiteering?"

McEntee's query went to Ohio Congressman Dennis Kucinich, but several Democratic contenders, including Graham, were there to hear it.

Graham himself has criticized the Halliburton contracts on the campaign trail, but he's never owned up to owning as much as $15,000 in Halliburton stock, which he bought on November 5, 2001, seven weeks after the September 11 terrorist attacks.

Now it didn't take a chairman of the Senate Intelligence Committee, which Graham was at the time, to know that Halliburton was going to profit from September 11. The company had a track record of gaining federal contracts related to wars in the Middle East, beginning with Desert Storm. Was the senator banking on the idea that the new terror war would profit Halliburton and, in turn, himself?  

Jarding says absolutely not. But Halliburton, since September 11, has profited spectacularly from the "War on Terror" -- reaping a windfall of at least $600 million worth of work so far from no-bid contracts in Afghanistan and Iraq.

Graham, for his part, lost money on the Halliburton investment. The Halliburton stock price, which was about $23 when he bought it, plummeted just a month later amid concerns about multimillion-dollar judgments against the company in asbestos lawsuits. Graham sold all the Halliburton paper on December 7, a day the stock plunged 40 percent, down to just $12.

"Obviously, this was another poor investment for the Grahams," campaign officials wrote in their response to this article. "The issue of war profiteering has nothing to do with the stockholders or employees of Halliburton...

"The issue Senator Graham and others have made... is that the administration has close ties with the corporate heads of Halliburton and that Halliburton received the Iraqi contract without a bid, which is against government bidding regulations."

Another matter the Democrats will likely try to use next year against President Bush is the administration's inaction during the California energy crisis. But here again, Graham's stock buys might hamstring any hope he has of capitalizing on the issue.

Graham clearly knows that California, with its 54 electoral votes and thousands of big-money political donors, is a key state for Democratic presidential contenders. He's already made two trips to the state during the past few months.

But his purchase of Duke Energy stock could haunt him. Duke was more than just a company that owned two nuclear reactors -- it was also deeply involved in the energy crisis that hit California in 2000 and 2001.

On November 5, 2001, the same day the Halliburton stock was purchased, Graham invested $15,000 to $50,000 in the company. At that time, it was common knowledge that Duke was suspected of gouging California residents during the crisis, which saw electricity rates surge as much as 500 percent.

Early on in the crisis, which began in 2000 after the state deregulated the energy market, industry experts suspected that several companies, led by Enron, were creating fake electricity shortfalls to drive up prices. In 2001, the U.S. Senate Energy and Natural Resources Committee, on which Graham sat, held four emergency hearings on the energy crisis, beginning January 29. The Capitol talk was cheap, however, and little was accomplished.

In June of that year, the Senate Governmental Affairs Committee took the lead and in a June 20 hearing, California Gov. Gray Davis complained that companies had bilked his state out of about $9 million while the federal government did nothing.

Then the governor spoke of Duke Energy's involvement. "You'll not be shocked to hear that Duke acknowledged -- Duke Energy company -- acknowledged not too long ago that they charged the state about $3,800 a megawatt [more than 12 times the proper rate] in January...," Davis testified. "It's clear that the energy companies have exerted extreme power over our market and are driving up prices dramatically."

After Davis spoke, then-Federal Energy Regulatory Commission (FERC) Chair Curt Hebert noted that U.S. regulators had already ordered Duke -- which denies that it did anything wrong in California -- to refund the state its overcharges.

"It was a bit like being in the middle of a riot and seeing people looting stores," says Robert McCullough, an energy consultant who investigated the crisis. "This is by far the largest commercial fraud in the history of the world. Duke was one of the companies involved that had an astonishingly low level of generation during times of crisis... An electrical company is like a fire department, you need to count on them during the emergency."

Considering his position on the energy committee, Graham had to know that Duke was one of the companies suspected of ripping off California residents. When he bought the Duke stock in November 2001, the energy committee was helping to craft legislation designed to keep such crises from happening again. The purchase raises the question of whose side he was on and whether he intended to profit from Duke's manipulation of the California markets.

"While the energy crisis in California may have increased the profits of Duke Energy, it did not help its stock share, since most investors were unaware that Duke was profiting off of California energy consumers to the extent that they were," campaign staffers wrote in their response.

In March 2003, FERC issued a report naming Duke as one of the culprits in the manipulation of California markets. That investigation continues. In May, the company admitted it had engaged in about $1 billion worth of the sort of misleading trades that are often used to pump up financial reports, though company officials still deny any wrongdoing.  

Perhaps those trades tricked Graham, since he, again, lost money on the investment. He bought Duke when it was trading at about $38. By July 18, 2002, when he first began selling the stock, it was trading at about $20. He dumped the last of it on September 26, when it was going for $19, precisely half of what he paid for it.


In addition to the thousands of dollars Graham lost in the market, he also seems to have lost his sense of propriety, government watchdogs say.

"It raises certain questions when he's investing in companies he regulates and whether it's based on knowledge he has that the general public doesn't," Ben Allison, spokesman for the Center for Public Integrity in Washington, D.C., remarked when told of Graham's stock dealings. "There are potential conflicts of interests here and serious questions that he should answer."

But who wants to talk ethical violations when a presidential campaign is underway? Graham has speeches to give, the Democratic base to win, terror threats to preach, and songs to sing. The man whom Jay Leno called "Dick Gephardt without the charisma" is livening up his act, and it's no time to be slowed down by reminders of his corporate ties or deep Washington insider status. The truth can only hamper Doodle and his charisma tour.


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