You have to love two billionaires coming to Washington to purchase power. Two billionaires who need the government to make even more money. They are greedy and they have crossed the line when they use the power of the government to stamp out competition and to make good on Wall Street bets.
First is the case of billionaire Bill Ackman, the founder of Pershing Square Capital Management. According to an excellent piece in Fortune from a few months ago, he has come to Washington to enlist Members of Congress to destroy a company, Herbalife, for profit. He has made a bet that the company Herbalife will go bankrupt.
Ackman made a public case as to why he thought the company was a bad business model. Not many people bought his logic. So then he set out to get his pals on Capitol Hill to make good on his billion dollar bet.
Fortune reported that Ackman has poured himself into destroying the company at any cost. He does not care about Herbalife’s employees, nor does he care that he has to rent the power of the government to make god on his gamble:
Drawing upon bottomless resources and boundless self-confidence, Ackman has committed himself to destroying the company. In the nearly three years since his AXA Equitable presentation, he has denounced Herbalife and its executives in terms that no government authority ever has. It was “one of the great frauds of all time,” he said at a public presentation; Herbalife CEO Michael Johnson was “running a criminal enterprise,” he told Fox; company executives were “at risk of going to jail,” he told CNBC. He has hired lobbyists to alert community groups to the alleged dangers of Herbalife and has given those groups money to find victims and connect them to regulators. His agents have set up websites, taken out ads, posted notices, and set up 1-800 numbers. They have tracked down former Herbalife employees and distributors, looking for whistleblowers. They’ve solicited nonprofits, concerned citizens, and politicians—including three congressmen and a U.S. senator—to write the FTC and at least seven state attorneys general, sometimes without the letter writers even realizing that a hedge fund manager was the master puppeteer orchestrating the campaign.
A smart piece in Townhall.com by Daniel Horowitz argues that Ackman is a one man lobbying interest trying to get the government to crush Herbalife:
Over the past few years, several Members of Congress have contacted Federal Agencies to demand investigations into the business practices of a single publicly traded company – Herbalife. While such requests are normal actions of nearly every Member of the House and Senate, usually such specific and financially impactful actions are carefully thought through, researched and evaluated. More to the point, these official actions are supposed to be ethically constrained to be on behalf of constituents or in the national interest. Federal investigations are not supposed to be requested merely to assuage the financial needs of a single flailing hedge fund manager focused on recouping a poor stock market bet. But sadly, all of the bureaucratic paper pushing and Congressional angst over Herbalife has been revealed to simply assist one person, Bill Ackman, a ultra-wealthy hedge fund manager who chose to make a $1 BILLION wager that the public stock price of Herbalife would fall to a record low.
Ackman and Pershing Square are not the only ones trying to rent some politicians to help them make even more money. Next is the case of billionaire casino magnate Sheldon Adelson who has drafted up legislation to eliminate online competition to his Vegas based casino.
Adelson had his lobbyists draft up legislation to outlaw his competition. You see, he does not own online poker companies, therefore he wants them put out of business under the pre-text that being physically in a casino, in the presence of professional ladies of the night and unlimited free booze, is safer than gaming from ones computer or smart phone.
Tim Carney has a funny post at the Washington Examiner where he makes the case that this week’s hearing in the House Oversight & Government Reform Committee was a dog and pony show put on for the benefit of Adelson.
Casino mogul Sheldon Adelson supports federal regulation that outlaws online gambling. That’s fairly normal: Big businesses often seek regulation as a way to protect themselves from that wretched thing called competition.
Here’s the extraordinary thing: Republican congressman Jason Chaffetz actually adopted as the title of his hearing on online gambling yesterday a tagline Adelson’s lobbyists had been using.
And it is not the first time Adelson has rented Congress for a hearing. The American Spectator reported in March of this year the following (italics mine):
Which is part of why (Adelson) decided to buy a hearing recently to discuss potential congressional action to outlaw Internet wagering nationwide. The hearing will deal with H.R. 707, whose sponsors claim it would “restore” the 1961 Wire Act to its original intent. The Wire Act was pushed through during the Kennedy administration to combat telephone-based sports wagering run by the Mafia, which, of course, recognized no state borders. This would be applied to casino games and target otherwise-legitimate businesses engaging in commerce states — not Washington — should decide whether to permit. Adelson didn’t actually buy a hearing. He merely contributed to the campaigns of those who called it and counted on them to take care of the witness list. And they did take care of it — four witnesses so far, all called by Republicans and all opposed to Internet gambling.
Americans can hope and pray that billionaires can’t get away with this type of behavior. Hopefully Congress stop this when the American people catch win of a billionaire trying to buy cronies and rent government to increase their profit margin.
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