Wed May 22 2013

John Edwards' fortress
by David Swanson
July 16, 2007

The bulk of John Edwards' wealth is invested in, his recent income derives from, and his biggest contributors are employed by Fortress Investment Group. Fortress, which paid Edwards almost half a million dollars to advise them, deals in hedge funds and private equity. Its private equity holdings have not been reported on. (Where is journalism when there's no sex involved?) Its hedge funds invest in, among other things, publicly traded companies. Those are reported to the SEC, most recently on May 15th in this filing: http://tinyurl.com/ytzlba

The list of companies invested in is large, but presumably well known to Edwards as a result of his well-paid advising and his massive investment in Fortress. It includes companies from a variety of industries, creating all sorts of conflicts of interest for a would-be public official. Just in the 'A's in the list we find: Advanced Medical Optics Inc., and Applera Corp. (medical); Aetna Inc., Amerigroup Corp., and Assurant Inc. (health insurance); Abbott Labs, Alpharma Inc., and Alexion Pharmaceuticals Inc. (pharmaceuticals); Altria Group (parent of Phillip Morris, cigarettes); American International Group (insurance); Amgen Inc. (biotech); Anadarko Petroleum Corporation, Apache Corp., Arena Resources Inc., Atlas America Inc., Atmos Energy Corp., and Avista Corp. (oil and gas); Autonation Inc. (cars); Anheuser Busch Cos. Inc. (beer), and many others.

Glancing through the full alphabet of companies, it is immediately apparent that Fortress represents the polar opposite of an ethical investment opportunity. Some names jump out at you as surprising companies for a Democratic presidential candidate to sink his fortune into, such as Wal Mart Stores Inc. There are a lot of telecom companies, like Verizon, in the list, lots of oil companies like Exxon Mobil, weapons companies like Lockheed Martin, big agricultural companies like Monsanto, a great many lending companies including several well known for predatory lending practices such as Wells Fargo, and numerous media corporations including Clear Channel.

Edwards has refused to take part in a debate run by Fox News, but has sunk his money into Clear Channel.

Fortress has also been a leading investor in companies privatizing prisons: http://www.secinfo.com/dsVsf.6eZq.b.htm

Fortress's 2006 Annual Report ( http://tinyurl.com/36g54o ) lists numerous subsidiaries as well, most of them based in Delaware or the Cayman Islands, a popular destination for the avoidance of regulations and taxes.

But Fortress has apparently decided to clean up its act. If Edwards is going to be president, and Fortress is going to become the new Halliburton, so to speak, Fortress wants to project the proper image. So it's decided to invest heavily in casinos and horse racing. In June, Fortress announced that it and a partner would buy Penn National Gaming for $6.1 billion.

It's not clear, however, that this move will outweigh the bad PR from Fortress's investment in Humana, the ruthless private health insurance company so pointedly criticized in Michael Moore's movie "Sicko." With the media ignoring Edwards' investment in Humana, the main concern Edwards' supporters have about "Sicko" is that it argues against the sort of health coverage plan their man supports. "Sicko" makes a powerful case for getting rid of private insurance companies and using a single-payer system of health coverage of the sort used by most wealthy nations in the world. That's the sort of system Congressman Dennis Kucinich advocates.

So, Edwards volunteers have been passing out flyers outside movie theaters showing "Sicko." The flyers include a chart comparing Edwards' health coverage plan with Kucinich's. (The flyer begins by dismissing Obama and Clinton as not having offered "universal" health coverage plans.)

The flyers, which say they are "designed and printed by a John Edwards volunteer" and include the John Edwards 08 logo, claim that Edwards will get everyone health coverage by 2012, whereas it will take Kucinich 15 years. But the bill Kucinich supports (HR 676) says it will go into effect in 1 year. It may take years to get fully up to speed, but because it uses a simple system used successfully by many other countries, we know it can work. Edwards' proposed system would keep the private insurance companies involved and expect the government to be able to control them, something Hillary Clinton famously failed at miserably. She was unable even to get her plan through Congress. Kucinich's plan already has 75 cosponsors in the House.

The flyers claim that under Edwards' plan tax credits to low-income citizens will create universal coverage. But that money will, of course, go to private insurance companies, including those Edwards' own personal finances depend on. In contrast, the flyers claim, Kucinich's plan would cover everyone "only after a long process of creating a national healthcare bureaucracy from scratch". The same flyer contradicts this by calling Kucinich's plan "Medicare for All" and by claiming that Edwards, too, would expand Medicare to cover most Americans. But Edwards would add to this the bureaucracy needed to keep track of who is covered in what way, who needs a tax credit, who has private insurance, who does not, and how good that private insurance is. Hospitals and doctors would have to keep in place all the bureaucracy needed to determine who was covered in what way and where their bill should go. And insurance companies would continue to waste American health care dollars on advertising and lobbying. Clearly Edwards wins in the bureaucracy promotion department.

The flyers try to turn this around and criticize Kucinich for wanting to "tear down much of the existing health structure," but that's exactly what any viewer of "Sicko" comes out of the theater wanting. Many people handed a flyer like this one are likely to wonder what Edwards' motivation could possibly be for not simply supporting single-payer health coverage.

Edwards may honestly believe that his plan is the best way to help sick Americans. His own financial interest in keeping private insurance companies in existence and boosting their profits may have nothing to do with his motivations. But why should Americans have to take that on faith? Shouldn't a presidential candidate avoid even the appearance of a conflict of interest?

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David Swanson was press secretary for Kucinich for President 2004 and briefly consulted for Kucinich's O8 campaign