Six years later, when asked about his ownership in ES&S by Lincoln's Channel 8 TV News, Hagel said he had sold that stock. If so, the stock he says he sold was never listed as one that he'd owned.
This is not a gray area. This is lying. Hagel's failure to disclose his financial relationship with the company was not brought to the attention of the public, and this was a material omission. Reporters surely would have inquired about it as they researched stories about
his amazing upset victories.
It is therefore understandable that we didn't know about conflicts of interest and voting machine ownership back in 1996. Had we known, perhaps we never would have chosen to herd every precinct in America toward unauditable voting. Certainly, we would have queried ES&S about its ties to Hagel before allowing 56 percent of the United States to count votes on its machines. In October 2002, I discovered that he still had undisclosed ownership of ES&S through its parent company, the McCarthy Group.
The McCarthy Group is run by Hagel's campaign finance director, Michael R. McCarthy, who is also a director of ES&S. Hagel hid his ties to ES&S by calling his investment of up to $5 million in the ES&S parent company an "excepted investment fund." This is important because senators are required to list the underlying assets for companies they invest in, unless the company is
"excepted." To be "excepted," the McCarthy Group must be publicly traded (it is not) and very widely traded (it is not).
Charlie Matulka, Hagel's opponent in 2002 for the U.S. Senate seat, finally got fed up. He called a press conference in the rotunda of the Nebraska Capitol Building on October 23, 2002. "Why would someone who owns a voting machine company want to run for office?" Matulka asked. "It's like the fox guarding the hen house."
Matulka wrote to Senate Ethics Committee director Victor Baird in October 2002 to request an investigation into Hagel's ownership in and nondisclosure of ES&S. Baird wrote back, in a letter dated November 18, 2002, "Your complaint lacks merit and no further action is appropriate with respect to the matter, which is hereby dismissed."
Neither Baird nor Hagel ever answered Matulka's questions, but when Hagel won by a landslide, Matulka dug his heels in and asked for a recount. He figured he'd lost, but he asked how much he'd need to pay to audit the machine counts. It was the principle of the thing, he said. Matulka received a reply from the Nebraska Secretary of State telling him that Nebraska has no provision in the law allowing a losing candidate to verify vote tallies by counting the paper ballots.
In January 2003, Hagel's campaign finance director, Michael McCarthy, admitted that Hagel had ownership ties to ES&S. When the story was finally told, Hagel's staff tried to claim there was no conflict of interest.
"[Hagel's Chief of Staff Lou Ann] Linehan said there's nothing irregular about a person
who used to run a voting-machine firm running for office,"wrote Farhad Manjoo of Salon.com. "'Maybe if you're not from Nebraska and you're not familiar with the whole situation you would have questions,' she says. 'But does it look questionable if there's a senator who is a farmer and now he votes on ag issues? Everybody comes from somewhere.'"10
Two points, Ms. Linehan: A senator, who is a farmer, if he follows the law, discloses that he is a farmer on his Federal Election Commission documents. Then, if he votes oddly on a farm bill, people scrutinize his relationship with farming. Second, the farmer's own cows aren't counting
his votes. Anyone with an I.Q. bigger than a cornhusk knows the real reason Hagel hid his involvement with American Information Systems on his disclosure statements. Hagel was reelected in November. An article in The Hotline quoted a prominent GOPer predicting that Hagel would run for president in 2008. The article then quotes Linehan: "It's abundantly clear that many people think that's a possibility for Senator Hagel."11
I called Victor Baird, counsel for the Senate Ethics Committee, beginning with a nonconfrontational question: "What is meant by 'widely traded' in the context of an 'excepted investment fund?'"
Baird said that the term refers to very diversified mutual funds. I asked why there were no records of Hagel's ties to the voting company in his disclosure documents. Was he aware of this? Had he requested clarification from Hagel? I knew I had struck a nerve. Baird was silent for a long time and then said quietly, "If you want to look into this, you'll need to come in and get hold of the documents."
Something in his tone of voice made me uncomfortable. I did not get the impression that Baird was defending Hagel. I rummaged through my media database and chose a respected Washington publication called The Hill, where I talked with reporter Alexander Bolton. He was intrigued, and over the next two weeks we spoke several times. I provided source material and he painstakingly investigated the story.
Unfortunately, when Bolton went to the Senate Public Documents Room to retrieve originals of Hagel's 1995 and 1996 documents, he was told they had been destroyed.
"They said anything over five years old is destroyed by law, and they pulled out the law,"said Bolton.
But the records aren't quite gone. Hagel's staff told Bolton they had the documents. I located copies of the documents at OpenSecrets.org, a Web site that keeps a repository for FEC disclosures. In 1997, Baird had asked Hagel to clarify the nature of his investment in McCarthy Group. Hagel had written "none" next to "type of investment."
This is not a gray area. This is lying. Hagel's failure to disclose his financial relationship with the company was not brought to the attention of the public, and this was a material omission. Reporters surely would have inquired about it as they researched stories about
his amazing upset victories.
It is therefore understandable that we didn't know about conflicts of interest and voting machine ownership back in 1996. Had we known, perhaps we never would have chosen to herd every precinct in America toward unauditable voting. Certainly, we would have queried ES&S about its ties to Hagel before allowing 56 percent of the United States to count votes on its machines. In October 2002, I discovered that he still had undisclosed ownership of ES&S through its parent company, the McCarthy Group.
The McCarthy Group is run by Hagel's campaign finance director, Michael R. McCarthy, who is also a director of ES&S. Hagel hid his ties to ES&S by calling his investment of up to $5 million in the ES&S parent company an "excepted investment fund." This is important because senators are required to list the underlying assets for companies they invest in, unless the company is
"excepted." To be "excepted," the McCarthy Group must be publicly traded (it is not) and very widely traded (it is not).
Matulka wrote to Senate Ethics Committee director Victor Baird in October 2002 to request an investigation into Hagel's ownership in and nondisclosure of ES&S. Baird wrote back, in a letter dated November 18, 2002, "Your complaint lacks merit and no further action is appropriate with respect to the matter, which is hereby dismissed."
Neither Baird nor Hagel ever answered Matulka's questions, but when Hagel won by a landslide, Matulka dug his heels in and asked for a recount. He figured he'd lost, but he asked how much he'd need to pay to audit the machine counts. It was the principle of the thing, he said. Matulka received a reply from the Nebraska Secretary of State telling him that Nebraska has no provision in the law allowing a losing candidate to verify vote tallies by counting the paper ballots.
In January 2003, Hagel's campaign finance director, Michael McCarthy, admitted that Hagel had ownership ties to ES&S. When the story was finally told, Hagel's staff tried to claim there was no conflict of interest.
"[Hagel's Chief of Staff Lou Ann] Linehan said there's nothing irregular about a person
who used to run a voting-machine firm running for office,"wrote Farhad Manjoo of Salon.com. "'Maybe if you're not from Nebraska and you're not familiar with the whole situation you would have questions,' she says. 'But does it look questionable if there's a senator who is a farmer and now he votes on ag issues? Everybody comes from somewhere.'"10
Two points, Ms. Linehan: A senator, who is a farmer, if he follows the law, discloses that he is a farmer on his Federal Election Commission documents. Then, if he votes oddly on a farm bill, people scrutinize his relationship with farming. Second, the farmer's own cows aren't counting
his votes. Anyone with an I.Q. bigger than a cornhusk knows the real reason Hagel hid his involvement with American Information Systems on his disclosure statements. Hagel was reelected in November. An article in The Hotline quoted a prominent GOPer predicting that Hagel would run for president in 2008. The article then quotes Linehan: "It's abundantly clear that many people think that's a possibility for Senator Hagel."11
I called Victor Baird, counsel for the Senate Ethics Committee, beginning with a nonconfrontational question: "What is meant by 'widely traded' in the context of an 'excepted investment fund?'"
Baird said that the term refers to very diversified mutual funds. I asked why there were no records of Hagel's ties to the voting company in his disclosure documents. Was he aware of this? Had he requested clarification from Hagel? I knew I had struck a nerve. Baird was silent for a long time and then said quietly, "If you want to look into this, you'll need to come in and get hold of the documents."
Something in his tone of voice made me uncomfortable. I did not get the impression that Baird was defending Hagel. I rummaged through my media database and chose a respected Washington publication called The Hill, where I talked with reporter Alexander Bolton. He was intrigued, and over the next two weeks we spoke several times. I provided source material and he painstakingly investigated the story.
Unfortunately, when Bolton went to the Senate Public Documents Room to retrieve originals of Hagel's 1995 and 1996 documents, he was told they had been destroyed.
"They said anything over five years old is destroyed by law, and they pulled out the law,"said Bolton.
But the records aren't quite gone. Hagel's staff told Bolton they had the documents. I located copies of the documents at OpenSecrets.org, a Web site that keeps a repository for FEC disclosures. In 1997, Baird had asked Hagel to clarify the nature of his investment in McCarthy Group. Hagel had written "none" next to "type of investment."
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