Roger Cohen, in a column titled “Italy’s Man From God” says the story of Raffaello Follieri serves as a cautionary tale on what happens when business, charity, fund-raising and politics blur. It also serves as a knife in the back of Clinton’s campaign. Mr. Krugman is writing about unions. He says although the movement is a shadow of its former self, unions still matter politically. Here’s Mr. Cohen:
Charming Italians who parlay supposed Vatican ties into financial gain are nothing new. When I was a correspondent in Italy in the 1980s, Roberto Calvi played that game. He ended up hanging from Blackfriars Bridge in London.
Raffaello Follieri, from San Giovanni Rotondo on the spur of Italy’s boot, is alive and kicking in his $40,000-a-month duplex on Fifth Avenue. Age 29, he used empty claims of church ties to befriend Douglas Band, a top aide to Bill Clinton. Band then smoothed the way to Clinton’s moneyed entourage, including the California billionaire Ronald Burkle.
That relationship birthed the unhappy union of Burkle’s Yucaipa investment operation, of which Clinton is a senior adviser, and the Follieri Group in a venture to acquire Catholic Church property Follieri said he’d get on the cheap.
From mid-2005, Burkle plowed $55.6 million into this enterprise, only to conclude Follieri was devoting a chunk of it to good living. A suit filed by Yucaipa in Delaware in May contends Follieri has been “systematically misappropriating the assets” to indulge in “massive charges for five-star lodging,” “dog care” and “inappropriate jet travel” for himself and “his actress girlfriend.” That’s Anne Hathaway, of “The Devil Wears Prada.”
Follieri, whose dealings with Band were first chronicled by Claudio Gatti in the Italian daily Il Sole 24 Ore, denies the suit’s allegations, which put his misappropriations at $1.3 million.
It also accuses him of funneling money for phantom “engineering studies” to “Studio Sodano,” run by Andrea Sodano, the nephew of the former Vatican secretary of state, who appears to represent the sum of Follieri’s vaunted Vatican ties.
After working briefly for Yucaipa-Follieri this year, Carmela Santucci, a hedge fund marketer, said in a Feb. 21 e-mail message to Follieri, copied to Yucaipa, that “little by little your web of lies revealed themselves to me.” She describes him as delusional.
The mystery is how a conclusion Santucci reached in two weeks eluded Clinton’s entourage. Frank Quintero, a Yucaipa spokesman, said, “The business model was good, but we’re unhappy with Follieri’s spending habits.”
Follieri partied with the Clintons in the Dominican Republic in 2006, hung out with Band and got an on-stage thank you from Bill Clinton for a $50 million charity pledge at the 2006 meeting of the Clinton Global Initiative. (It was not paid.)
Band, a former White House intern, did not respond to three e-mail messages. Jay Carson, a Clinton spokesman who addressed the Band-Follieri ties in a Wall Street Journal article in September, declined to comment.
Band’s introduction of Burkle to Follieri was one of many. Other folk presented reflected a Rolodex of the globe’s affluent from the Clinton library, foundation and Global Initiative. They included Howard Kessler, the pioneer of affinity credit cards, the Mexican billionaire Carlos Slim Helú and Michael Cooper, a Canadian property tycoon.
Cooper provided millions to Follieri. In March 2006, the Italian paid Band $400,000 for this introduction.
Carson told The Wall Street Journal Follieri “offered” this money to Band. But a March 22, 2006, invoice from Band, addressed to Follieri’s Channel Islands-based Auspice Holdings, made a categorical request: “This will serve as a bill for consulting services for the amount of $400,000.” Band asked for the money to be wired to a Citigroup account, number 26408901, of a Florida company, SGRD, he and his brother set up. Six days later he again demanded the funds. Other exchanges suggest Band advised Follieri on soliciting Bahraini and Slim money.
Band, through Carson, told The Journal he didn’t keep the $400,000. Half went to Cooper. Why, when and where the other half went are unclear. Cooper told me he had no comment.
The Yucaipa-Follieri suit may be near settlement. A draft made available to me sets out a divorce on the basis of a $12 million payment from Follieri to Yucaipa. Follieri would get “complete ownership.”
“One of the partners is buying out the other,” Follieri told me. He again denied “misappropriation.” But it’s not clear where Follieri will get the money. He’s in talks with Plainfield Asset Management of Greenwich, Conn., to sell for $12 million land the joint venture owns.
The whole thing’s a mess. No wonder Bill Clinton is eyeing what Band called “an appropriate transition” out of Yucaipa. Band told The Huffington Post this would occur if Hillary Clinton gets the Democratic nomination. It might happen earlier.
That would be salutary. Band did Burkle and Cooper no favors with Follieri. Clinton does his wife no favors where the margins of business, charity, fund-raising and politics blur.
Follieri, who laughably promised the Clintons the Catholic vote, has a new baby: the World Missions Visa Credit Card. Purchases result in church donations. Kessler — another friend of Bill and contributor to Hillary’s campaign — helped the deal for the card with Washington Mutual, an insider says. The Kessler Group did not respond to a call.
So we can safely assume that the International Herald Tribune doesn’t want Hillary in the White House. Here’s Mr. Krugman:
Once upon a time, back when America had a strong middle class, it also had a strong union movement.
These two facts were connected. Unions negotiated good wages and benefits for their workers, gains that often ended up being matched even by nonunion employers. They also provided an important counterbalance to the political influence of corporations and the economic elite.
Today, however, the American union movement is a shadow of its former self, except among government workers. In 1973, almost a quarter of private-sector employees were union members, but last year the figure was down to a mere 7.4 percent.
Yet unions still matter politically. And right now they’re at the heart of a nasty political scuffle among Democrats. Before I get to that, however, let’s talk about what happened to American labor over the last 35 years.
It’s often assumed that the U.S. labor movement died a natural death, that it was made obsolete by globalization and technological change. But what really happened is that beginning in the 1970s, corporate America, which had previously had a largely cooperative relationship with unions, in effect declared war on organized labor.
Don’t take my word for it; read Business Week, which published an article in 2002 titled “How Wal-Mart Keeps Unions at Bay.” The article explained that “over the past two decades, Corporate America has perfected its ability to fend off labor groups.” It then described the tactics — some legal, some illegal, all involving a healthy dose of intimidation — that Wal-Mart and other giant firms use to block organizing drives.
These hardball tactics have been enabled by a political environment that has been deeply hostile to organized labor, both because politicians favored employers’ interests and because conservatives sought to weaken the Democratic Party. “We’re going to crush labor as a political entity,” Grover Norquist, the anti-tax activist, once declared.
But the times may be changing. A newly energized progressive movement seems to be on the ascendant, and unions are a key part of that movement. Most notably, the Service Employees International Union has played a key role in pushing for health care reform. And unions will be an important force in the Democrats’ favor in next year’s election.
Or maybe not — which brings us to the latest from Iowa.
Whoever receives the Democratic presidential nomination will receive labor’s support in the general election. Meanwhile, however, unions are supporting favored candidates. Hillary Clinton — who for a time seemed the clear front-runner — has received the most union support. John Edwards, whose populist message resonates with labor, has also received considerable labor support.
But Barack Obama, though he has a solid pro-labor voting record, has not — in part, perhaps, because his message of “a new kind of politics” that will transcend bitter partisanship doesn’t make much sense to union leaders who know, from the experience of confronting corporations and their political allies head on, that partisanship isn’t going away anytime soon.
O.K., that’s politics. But now Mr. Obama has lashed out at Mr. Edwards because two 527s — independent groups that are allowed to support candidates, but are legally forbidden from coordinating directly with their campaigns — are running ads on his rival’s behalf. They are, Mr. Obama says, representative of the kind of “special interests” that “have too much influence in Washington.”
The thing, though, is that both of these 527s represent union groups — in the case of the larger group, local branches of the S.E.I.U. who consider Mr. Edwards the strongest candidate on health reform. So Mr. Obama’s attack raises a couple of questions.
First, does it make sense, in the current political and economic environment, for Democrats to lump unions in with corporate groups as examples of the special interests we need to stand up to?
Second, is Mr. Obama saying that if nominated, he’d be willing to run without support from labor 527s, which might be crucial to the Democrats? If not, how does he avoid having his own current words used against him by the Republican nominee?
Part of what happened here, I think, is that Mr. Obama, looking for a stick with which to beat an opponent who has lately acquired some momentum, either carelessly or cynically failed to think about how his rhetoric would affect the eventual ability of the Democratic nominee, whoever he or she is, to campaign effectively. In this sense, his latest gambit resembles his previous echoing of G.O.P. talking points on Social Security.
Beyond that, the episode illustrates what’s wrong with campaigning on generalities about political transformation and trying to avoid sounding partisan.
It may be partisan to say that a 527 run by labor unions supporting health care reform isn’t the same thing as a 527 run by insurance companies opposing it. But it’s also the simple truth.
While you’re thinking about gifts for friends and family, please consider a gift of rice to the United Nations World Food Program: Free Rice. Play a word game and hungry people get rice. It’s a win-win situation!
