Catastrophe - Dick Morris [96]
But here’s the strange thing: The $1.2 million Kennedy Jr. made for getting the union’s pension board to invest with the Intercontinental Real Estate Fund III didn’t come from Intercontinental. It was charged to the unions!
Why would a union pay Kennedy’s marketing fee in exchange for the privilege of investing its pension money? Wouldn’t it make more sense for Intercontinental—which had hired the marketers and gotten the money—to pay that fee? A lot of union people asked the same question. After all, pension funds don’t normally pay for the marketing expenses of companies that pitch them to get them to invest.
One of the board members of a teachers’ pension fund invested in Intercontinental raised the issue:
The $10 billion Chicago Teachers’ Pension Fund, wooed by the younger Kennedy, spent months mulling whether to invest $35 million with Intercontinental. Jacob Silver, a 13-year veteran of the Chicago pension board, learned about Intercontinental over dinner with Kennedy at an Orlando conference last summer. Other Chicago trustees met with Kennedy, and in November Intercontinental made a formal proposal to the Chicago fund’s board. The board’s lawyer, Joseph Burns, noticed the marketing fee in the offering documents and alerted the board via e-mail. “It took a lot of nerve even to ask us for the money,” says Silver. “Intercontinental hired him [Kennedy]—we didn’t.” He adds that the pension fund had never before been asked to pay extra for a fund’s marketing costs.338
The Chicago board refused to pay the fee.
After all, the fee was backward. The company that’s soliciting the investment should pay for the marketing, not the pension fund that contributes its money.
So why did Kennedy Jr. hit up the union for the money?
Taking a page from the Bill Clinton playbook, Kennedy did it because he could.
With Senator Edward Kennedy’s power in labor circles—and his chairmanship of the labor committee—most unions wouldn’t want to say no. And who knows how many gave in and paid up?
When the dispute became public, Kennedy defended himself against suggestions that he was trading on his family name. He suggested that he viewed his work as a “public service,” insisting “I am committed to building my company and providing the highest-quality service to my friends in organized labor.”339
Public service? Is he kidding? What kind of public service is it to take millions of dollars from working people’s pensions to line your own pockets? Especially when the entire transaction is predicated on your relationship to your father? Remember, those “friends” Ted Jr. referred to are the same folks who are always looking for votes from their other good friend, Senator Ted Kennedy, chairman of the Senate committee on Health, Education, Labor and—what was that again? Oh, yes, and Pensions.
Do you see what’s wrong with this picture? The son of a senator who’s in a position to influence all legislation regarding unions and pensions is hitting up pension funds from the very unions who want favors from his father? And hitting them up for a controversial and unorthodox fee?
Do the unions have to worry that they might not get what they want—or even might see retaliation—if they don’t succumb to the demands for enormous fees to come from the pensions of their workers?
It gets worse. The teachers’ union incident wasn’t an isolated one. In Senator Kennedy’s home state of Massachusetts, the state’s Pension Reserves Investment Management Board approved a $10 million investment in another Intercontinental fund marketed by Ted Kennedy, Jr. The pension board was chaired by the state’s treasurer, Timothy Cahill. According to the Boston Globe, Senator Kennedy invited Cahill and a deputy, Doug Rubin, to a special barbecue dinner at his Hyannis Port oceanfront home.340 Cahill told the Globe the pension issue was never discussed at the Kennedy