Campaign News

Mr. Rangel Goes To Washington

campaign — Tue, 31 Aug 2010 16:06:23 -0400

By Seth Lipsky, Special to the Sun | August 31, 2010

Mr. Smith: "Are you drunk?"

Miss Saunders: "Certainly. You didn't think I was a lady, did you? You don't think a lady would be working for this outfit. Even I can't take it anymore. I quit. Can't take a lot of things. You. I can't watch a simple guy like you - Why don't you go back home? Take my advice. Go on back to your prairies - roust your rangers around - tell your little streams about your camp and the land of the free! This isn't any place for you. You're half-way decent. You don't belong here. Go home. That's all I'll tell you. That's all. I owe my conscience that much . . ."

* * *

The hero of "Mr. Smith Goes to Washington," played by Jimmy Stewart, is a youth leader who was beloved by his young rangers and wanted to build a boys' camp to get the city kids out into the fresh air. The hero of this saga, Charlie Rangel of Harlem, is a decorated war veteran who is beloved even by many who disagree with him and who wanted to build a center at a college for poor children that would lift them up into public service.

And for this, the Congress, like it did Mr. Smith, is going to put him on trial - and, in Mr. Rangel's case, later this month.

It may not be a perfect analogy. Hollywood's fictional Mr. Smith was a young man just starting out, way over his head, or so it seems at first, when the home-town newspapers tried to hang a scandal around his neck. Mr. Rangel is a suave veteran of 40 years in Congress, a master of the game, or so it seems at first, when the home town press barons tried to hang a scandal around his neck. But the congressman is being widely mocked for standing his ground, just as Mr. Smith was in the movie, and the trial that resulted in the movie was something to see. So, we expect, will be the trial of Mr. Rangel.

The chairman of Ways and Means requested a formal investigation after the home town newspaper barons started printing stories about his use of a rent-controlled apartment for a campaign office and his use of congressional letterhead to write to private donors to try to get them to help City College defray costs of a center to help minority students train for public service. It turned out that the chairman of the tax-writing committee had also failed to declare certain rental income to the IRS and certain assets required to be disclosed to the Congress.

My own view of this is that the worst of it amounted to small beer and the combination, several bottles of small beer. There is no allegation that the congressman took any money. In my view, the right thing is to hand Mr. Rangel back the gavel to the Ways and Means Committee and let the people of Harlem, who in any event have more credibility than the Congress, decide what they want to do about the man who has represented them in Washington these past 40 years.

Things have gotten to a point, though, where at least some of us are looking forward to the trial of Mr. Rangel. He may have been mocked for his rambling floor speech, in which he told his colleagues that if they wanted to throw him out of the Congress they should go ahead and do it but that he wanted the chance to defend himself. Even the president of America seemed to have pre-judged Mr. Rangel. One gets the feeling that they'd all be happier if he just went back to New York and, like Miss Saunders said to Mr. Smith, talked to the young rangers at the Rangel Center about freedom.

But Mr. Rangel, like Mr. Smith, wants a hearing, and it wouldn't surprise me if the press galleries fill up. Whose idea was it to start this center for minority youth? Whose idea was it to name it for Mr. Rangel? So far the president of City College on whose watch this occurred, Gregory Williams, has declined to respond to the press. He is a distinguished figure, now president of the University of Cincinnati, and it was to him that the pledge of money for the Rangel Center was made. It'll be illuminating to see him on the stand.

What about the just retired district attorney of New York County, Robert Morgenthau? He is one of the most honest and longest-serving prosecutors in history. His grandfather was lifted from poverty and put on the road to public service by City College. After the DA was elected in 2005, he made a point of being sworn in at City College in a ceremony at which his former colleague, Mr. Rangel, presided. It was Mr. Morgenthau who introduced to Messrs. Rangel and Williams the chairman of Nabors Industries, Eugene Isenberg, who eventually, in a meeting with Mr. Williams, pledged $500,000 of his own money - and said he'd try to get his company's foundation to give another $500,000 - in a charitable gift to City College to help with the Rangel Center.

Neither Messrs. Morgenthau nor Rangel were at that meeting, which took place in 2006. Yet the New York Times has come in on the eve of the trial with a story suggesting that Mr. Morgenthau's motives were not, as he has always averred, charitable, because he owned stock in Nabors Industries, which several years later turned out to have an interest in legislation before Ways and Means. Yet Mr. Morgenthau had been publicly disclosing his stock holdings in Nabors, exactly as required. It seems that because the New York Times hadn't reported them before, the disclosures became suspicious.

Well, someone has to play the heavy-handed press baron who was so central to "Mr. Smith Goes To Washington." If it gets to a "trial," maybe the House Ethics Committee will subpoena the Gray Lady herself and ask her this question: Does the New York Times, or does it not, believe that Mr. Morgenthau's motives in this matter were something other than charitable?

And who, finally, is going to play the part of Senator Paine? He's the politician who, in "Mr. Smith Goes To Washington," turns against the young idealist and becomes his accuser before the Congress - until he can no longer stand his own hypocrisy and lunges off the senate floor and into the cloakroom, where he tries to shoot himself, only to careen back onto the floor, raving about how he doesn't deserve to be in the Congress at all?

Well, it's anyone's guess how this trial is going to end. In the movie, Mr. Smith and his Girl Friday, Saunders, look set to get married and, presumably, live happily ever after. Congress isn't Hollywood, of course, and it's probably a faint hope, but it would be good to see the Charles Rangel Center for Public Service grow and prosper at City College and Mr. Rangel and his wife of forty years, Alma, live happily ever after themselves.

Mr. Lipsky is the founding editor of The New York Sun.

Morgenthau, Rangel, Nabors, and the New York Times

campaign — Thu, 26 Aug 2010 17:39:58 -0400

Morgenthau, Rangel, Nabors, and the New York Times

http://www.futureofcapitalism.com/2010/08/morgenthau-rangel-nabors-and-the-new-york-times

The New York Times really goes off the deep end this morning with an article suggesting, on the basis of not a scintilla of evidence, that the former district attorney of New York County, Robert Morgenthau, was motivated by personal greed in putting a donor together with City College.

I rang Mr. Morgenthau this morning (it so happened we were in the same town in Massachusetts), to find out what the Times smear-hatchet job left out.

If you just read the Times story, you'd think that Mr. Morgenthau and the CEO of Nabors Industries, Eugene Isenberg, hatched the gift to City College as a plot to ingratiate themselves with Rep. Charles Rangel, who was in a position to help Nabors with what the Times calls a "tax loophole" and a "tax shelter."

As the Times puts it, Mr. Morgenthau "was an investor in Mr. Isenberg's oil drilling company at the time he arranged and attended two meetings between the two men, meaning his finances stood to be affected by the fate of the tax break." There was just one meeting, in September 2006, but more about that later.

Among the things the Times left out is that Mr. Isenberg has a long history of helping educational institutions in conjunction with Mr. Morgenthau when there are no tax issues at issue. He gave millions of dollars to the school of management at the University of Massachusetts, which is known as the Isenberg School of Management; Mr. Morgenthau gave the keynote speech there. Mr. Isenberg bought a building for the Parkside School in Manhattan for children with learning disabilities; Mr. Morgethau helped smooth the deal with a call to the lawyer representing the archdiocese of New York, which was selling the building. If all Mr. Morgethau and Mr. Isenberg were out in search of was a tax break, what explains the rest of their activity on behalf of education?

Or, for that matter, what explains Mr. Morgenthau's decision to be sworn in for his final term as D.A. in the great hall of City College, at a podium given by the class of his grandfather, who came to America in 1866 at age 10 not speaking a word of English and entered City College five years later, with the class of 1875? Readers of the Times article would know none of this, which provides a far better explanation for Mr. Morgenthau's desire to help City College than some search for a tax break.

As for that tax "break," "loophole," or "shelter," it's hardly as exceptional as the Times makes it out to be. Plenty of American companies that do business internationally make tax or regulatory-driven decisions to move to Bermuda. Nabors wound up paying more American taxes after the move than it did before (up to $391 milllion in 2006 from $175 million in 2001), because its business expanded. It's not a loophole or a shelter to pay the tax rate that legally applies to you; it's the rule of law.

Nor is it clear that Mr. Rangel would have been in a position to do anything about it. When the topic of the gift to City College was first raised, the Democrats did not control Congress, and Mr. Rangel was not chairman of the Ways and Means Committee. Even if he had been chairman of the Ways and Means committee, it's not clear that a committee effort retroactively to change the rules to prevent companies from moving their headquarters offshore for tax reasons would have withstood a legal challenge.

Nabors had made the move in 2002, the same year that Leucadia and Cooper Industries decided to do so and Stanley Works considered it; by the Times's theory, Congress should have somehow had in 2006 or 2007 the power to undo a corporate location decision by a company that had been made and implemented several years earlier. Again, none of this is in the Times article.

Mr. Morgenthau's holdings in Nabors were disclosed in city financial disclosure forms all along. They represent less than 10% of his overall portfolio. As for the idea that he profited greatly from what the Times describes as "Mr. Rangel's decision to help preserve the tax shelter in 2007 - an action that saved the company $650 million" - it's absurd. Nabors stock was trading at around $20 at the end of 2003, before the company moved to Bermuda. Today it's trading at around $16. Nabors stock was trading at around $33 in August of 2006 before the City College gift; now it is trading at around $16. I believe these numbers, from Yahoo! Finance, are adjusted for a 2:1 stock split in April 2006. The stock doesn't pay a dividend. Wherever this supposed $650 million is, it isn't in Mr. Morgenthau's pocket.

The Times article claims about Mr. Rangel, Mr. Morgenthau, and Mr. Isenberg that "After Mr. Isenberg donated $100,000 in December 2006, the three men met for a follow-up discussion about the contribution, this time at the Carlyle Hotel in Manhattan. That meeting took place on Feb. 12, 2007, the day the bill that affected the tax loophole was up before Mr. Rangel's committee." That's nonsense. There was no "meeting" between the three men on that date. Mr. Morgenthau and Mr. Rangel, who began his career as a lawyer working for Mr. Morgenthau when Mr. Morgenthau was U.S. attorney, were having a meal at the Carlyle as they sometimes do, and Mr. Isenberg, who likes the place because the manager is a graduate of the Isenberg School of Management at U. Mass., stopped by the table and said hello. In any event by then the Isenberg/Nabors gift to City College had already been signed, sealed, and delivered; Mr. Isenberg had notified the president of City College of that in a December 8, 2006, phone call.

It takes an imaginative Times reporter to turn a charitable donation to City College into some kind of nefarious conspiracy motivated by personal or corporate greed. Imagine what such a reporter could do with this set of facts: Major stockholders in a publicly traded company who are sisters of its chairman emeritus give a $4 million gift to part of the City University of New York to endow scholarships named after the chairman emeritus - scholarships that will subsidize the training of students who may go on to work for the publicly traded company. Sound suspicious?

That set of facts describes the gift by Marian S. Heiskell, Ruth S. Holmberg and Dr. Judith P. Sulzberger to create the Punch Sulzberger Scholars program at the CUNY Journalism School.

So long as the Times is going to be in the business of concocting ridiculous theories of self-interested motives for gifts to fund scholarships at City University, it may want to have a look at its own practices before smearing the reputation of a guy with Mr. Morgenthau's lifetime record of integrity and public service.

Disclosures: I own some Leucadia. The New York Sun editorial mentioned in the Times article mentions this site, and I used to work at the New York Sun and own part of it, though I no longer do.

Some minor edits made to this post Wednesday afternoon.

Rangel Birthday Gala August 11, 2010

NGP Admin — Mon, 26 Jul 2010 17:50:20 -0400

Dionne Warwick singing to Congressman Rangel, "That's What Friends Are For".

You Are Invited to a Private Reception Honoring Congressman Charles B. Rangel

campaign — Tue, 24 Aug 2010 15:14:55 -0400

Please Join

Amelia Alverson Bobbie Berkowitz Linda Fried

Ross Frommer Lee Goldman Sandra Harris

Rafael Lantigua Jeffrey Lieberman Joanne Quan

At a Private Reception Honoring

Congressman Charles B. Rangel

Dean, NY Delegation and Committee on Ways and Means

Tuesday, September 7, 2010

5:30 PM to 7:30 PM

Coogan's Restaurant

4015 Broadway at W.169^th Street, New York City

o Host $500

o Individual $250

Kindly R.S.V.P.

or contact Darren Rigger at 212-862-4990 or

email: djrigg@aol.com