U.S. Senator Reid, son combine for China firm's desert plant BY MARCUS STERN WASHINGTON Fri Aug 31, 2012
(Reuters) - U.S. Senator Harry Reid recognized nine years ago that connections between his official duties and the lobbying activities of his relatives could lead to ethical questions.
In 2003, the Nevada Democrat publicly banned relatives from lobbying him or his staff after newspaper reports showed that Nevada industries and institutions routinely turned to Reid's sons or son-in-law for representation.
Now, questions surrounding family ties are flaring again in Nevada around the Senate majority leader. He and his oldest son, Rory, are both involved in an effort by a Chinese energy giant, ENN Energy Group, to build a $5 billion solar farm and panel manufacturing plant in the southern Nevada desert.
Reid has been one of the project's most prominent advocates, helping recruit the company during a 2011 trip to China and applying his political muscle on behalf of the project in Nevada. His son, a lawyer with a prominent Las Vegas firm that is representing ENN, helped it locate a 9,000-acre (3,600-hectare) desert site that it is buying well below appraised value from Clark County, where Rory Reid formerly chaired the county commission.
Craig Holman, a lobbyist for the non-partisan advocacy group Public Citizen, said the senator is dealing with "an iffy ethical landscape" because of the family connections and should recuse himself from the project. "Is this just happening because ... it benefits the Reid family, or did Harry Reid actually believe in this?" Holman said.
The senator has supported numerous clean energy projects in Nevada. Rory Reid cites energy as one of his specialty areas at the law firm.
The two Reids deny discussing the ENN project.
"I have never discussed the project with my father or his staff," said Rory Reid. Kristen Orthman, a spokeswoman for the senator, said he had not discussed the project with his son.
The Langfang, China-based ENN Energy Group hopes to build what would be the largest solar energy complex in America. The site chosen with Rory Reid's guidance is in tiny Laughlin, Nevada, a gambling town of 7,300 along the Colorado River, 90 miles south of Las Vegas.
County officials have said that they were so thrilled to recruit a company to the area, with the prospect of thousands of new local jobs, that they were eager to negotiate.
ENN is headed by Chinese energy tycoon Wang Yusuo, who made a fortune estimated by Forbes at $2.2 billion distributing natural gas in China. Wang escorted Reid and a delegation of nine other U.S. senators on a tour of the company's clean energy operations in Langfang, and Reid featured Wang as a speaker at his 4th annual National Clean Energy Summit in Las Vegas last year.
NEVADA'S LARGEST LAW FIRM
To advance the Nevada project, ENN retained the state's largest and most prestigious law firm - Lionel Sawyer & Collins, where Rory Reid works. It is headed by Richard Bryan, a former Nevada attorney general, governor and member of the U.S. Senate.
Rory Reid faced a one-year cooling off period from lobbying the Clark County commission after leaving his post in January 2011, and Bryan took the lead on ENN's negotiations with the county.
Since the one-year ban expired, Rory Reid has been ENN's primary representative before the county, according to Steve Sisolak, the board's vice chairman.
Rory Reid acknowledged representing ENN at both the county and state levels since January. He declined to discuss the project otherwise.
Two months after Harry Reid's China trip, Lionel Sawyer registered ENN Mohave Energy LLC as an American subsidiary of the Chinese company. The firm negotiated with the county to buy the land rather than lease it, as the county's staff had recommended.
In December, Clark County commissioners voted unanimously to sell up to 9,000 acres of public land to the subsidiary at pennies on the dollar.
The deal spurred local controversy. Separate appraisals valued the land at $29.6 million and $38.6 million. The commission agreed to sell it to ENN for $4.5 million.
The county did build in certain conditions before the project could begin, including milestones for jobs creation and investment. ENN also must assure the county that it has a power company willing to commit to buying energy from the solar farm. But in the eight months since the commissioners approved the deal, no utility has signed a power purchase agreement.
However, Harry Reid stepped up again.
The Democrat recently used an online discussion related to his annual energy summit for an as-yet unsuccessful effort to pressure Nevada's largest power company, NV Energy, to sign up as ENN's first customer.
In the July 30 discussion, Reid said the project "would start tomorrow if NV Energy would purchase the power." The utility controls "95 percent of all of the electricity that is produced in Nevada and they should go along with this." Reid's online comments were first reported by the Las Vegas Review Journal.
The power company responded by saying it had exceeded its minimum renewable energy requirements both last year and this year, though it would consider buying power from ENN in the future. A spokesman for NV Energy declined to discuss the matter further.
Bryan, the head of the law firm, did not return repeated phone calls and emails.
An official with ENN in Langfang did not respond to emails.
In 2007, after a controversy over the number of lawmaker relatives engaged in lobbying, Congress passed the Honest Leadership and Open Government Act, sharply restricting the lobbying activities of close relatives of members of Congress.
The law only applies to registered lobbyists and Rory Reid is not registered as a federal lobbyist in Washington or a state lobbyist in Nevada, according to records in both jurisdictions.
Harry Reid Earns a Spot on List of Most Corrupt Politicians
It should come as no surprise to anyone in Nevada who was followed the news in 2012 that Harry Reid was named by Judicial Watch, a public interest group that investigates and prosecutes government corruption, to its 2012 list of Washington’s “Ten Most Wanted Corrupt Politicians.” The group lists the top 10 alphabetically so there is no way to tell if Harry was No. 1 or No. 10. Here is what Judicial Watch said earned Harry a spot on the dishonor role: A July 30, 2012, headline in the Las Vegas Review-Journal alerted Nevadans to Sen. Harry Reid’s latest influence-peddling scandal – this one involving ENN Energy Group, a Chinese “green energy” client of the Nevada law firm of which Reid’s son, Rory, is a principal.
As Reuter’s reported on August 31, 2012, “Reid has been one of the project’s most prominent advocates, helping recruit the company during a 2011 trip to China and applying his political muscle on behalf of the project in Nevada. His son, a lawyer with a prominent Las Vegas firm that is representing ENN, helped it locate a 9,000-acre (3,600-hectare) desert site that it is buying well below appraised value from Clark County, where Rory Reid formerly chaired the county commission.”
“Well below appraised value” is a considerable understatement. The deal Rory Reid put together for the firm his dad brought to town saw ENN purchase the site for just $4.5 million – a mere fraction of separate appraisals that valued the property at $29.6 million and $38.6 million. Even with all of that, however, the project has failed to move forward as rapidly as Harry and Rory Reid would like – for the simple reason that there is currently no market in Nevada for the green energy ENN claims it could produce. But, of course, funneling money to the Reid family is nothing new for the Senate Majority Leader. As the Washington Postreported in a February 7, 2012, story titled “Public projects, private interests:” In 2004 and 2005, the Senate majority leader secured $21.5 million to build a bridge over the Colorado River, linking the gambling resort town of Laughlin, Nev., with Bullhead City, Ariz. Reid owns 160 acres of undeveloped land in Bullhead City.
And according to Peter Schweizer, writing for Fox News on December 12, 2012, “Sen. Reid has sponsored at least $47 million in earmarks that directly benefitted organizations that one of his sons, Key Reid, [RW1] either lobbies for or is affiliated with. Needless to say, the well-entrenched Sen. Reid has been a repeat Top Ten offender.
The $47 million in earmarks for clients of Key Reid is probably the only item you might’ve missed. The rest, as they say, was in all the papers — and on certain blogs.
Judicial Watch overlooked Harry’s pressing for a wind energy project in his hometown of Searchlight that miraculously eliminated in its second phase plans for any windmills anywhere near Harry’s home.
Nor did they mention his bald-faced claim that Mitt Romney paid no income taxes, nor his rubberstamping Obama’s recess appointments while the Senate was not in recess, nor throwing overboard his constituents in Ely by abandoning support for its airport subsidy, nor his lambasting of critics of his nuclear regulatory appointee, nor the fact his Senate hasn’t passed a budget in three years, nor his flip-flops on Social Security and immigration, nor his criticism of a Republican congressional candidate over a real estate deal gone bad when half his constituents are underwater on their mortgages, nor his accusing a fellow Mormon of sullying the religion while he embraces gay marriage, nor his blocking a land bill that would create 800 jobs because his environmentalist buddies wanted a wilderness area in exchange, nor his effort to gag Republicans by changing filibuster rules.
Others who made Judicial Watch’s top 10 include: Obama, Hillary Clinton, Energy Secretary Chu, HHS Secretary Kathleen Sebelius, Attorney General Eric Holder and assorted congresscritters.
It’s hard to buy undeveloped land in booming northern Arizona for $166 an acre. But now-Senate Majority Leader Harry Reid effectively did just that when a longtime friend decided to sell property owned by the employee pension fund that he controlled.In 2002, Reid (D-Nev.) paid $10,000 to a pension fund controlled by Clair Haycock, a Las Vegas lubricants distributor and his friend for 50 years. The payment gave the senator full control of a 160-acre parcel in Bullhead City that Reid and the pension fund had jointly owned. Reid’s price for the equivalent of 60 acres of undeveloped desert was less than one-tenth of the value the assessor placed on it at the time.
Six months after the deal closed, Reid introduced legislation to address the plight of lubricants dealers who had their supplies disrupted by the decisions of big oil companies. It was an issue the Haycock family had brought to Reid’s attention in 1994, according to a source familiar with the events.
If Reid were to sell the property for any of the various estimates of its value, his gain on the $10,000 investment could range from $50,000 to $290,000.
It is a potential violation of congressional ethics standards for a member to accept anything of value — including a real estate discount — from a person with interests before Congress. The bill that Reid proposed never passed, but the land passed to Reid nevertheless. It would have imposed government restrictions on interruptions of supply from oil suppliers to lubricant distributors, a common problem faced by people like Haycock. Although his repeated attempts to pass the legislation never succeeded, Reid’s efforts made it clear to the suppliers that Congress had, in the words of LAT reporters Chuck Neubauer and Tom Hamburger, taken an interest in supply interruptions — a message that certainly seems intended to intimidate Haycock’s suppliers.
In 1982, Haycock and Reid purchased the land in a partnership in which Reid owned a five-eighths share. Haycock spent $1500 an acre for his share of the land. In 1987, Haycock used his portion of the land as a contribution to his employee pension fund. A few years later, a California group bought the entire 160 acres from Reid and Haycock for over $1.3 million, which amounted to $8400 an acre — a fabulous return on investment over the 10 years that Reid and Haycock held the land. Unfortunately, the California investors ended up defaulting on the sale, and it reverted back to Reid and Haycock.
In 2001, Haycock’s firm began liquidating assets of the pension fund, and Haycock found he could not buy it himself. Instead, he offered it to Reid — for a price that amounted to one-tenth the value of the original purchase, and one-fortieth of the price the parcel fetched on the market ten years earlier.
Reid and his apologists point out that the parcel has topographical challenges, and that a minority share would have been difficult to sell to anyone but the majority partner. However, the LAT researched adjacent parcels and discovered that they commanded a price far above Reid’s eventual purchase price — over $4,000 an acre. Minority sales generally get discounted at around 20%, not 98%, even in the Mojave Desert.
This isn’t the first time we’ve seen shady land deals involving Harry Reid. He also had the singular achievement of getting paid over a million dollars on land for which he never disclosed his ownership, a story the LAT reported in October of last year. Reid stopped talking about the “culture of corruption” during the final weeks of the midterms last year — probably because it hit too close to home.
This deal certainly has the appearance of a slimy quid pro quo. Will the reformist zealotry of the Democratic majority be brought to bear on Reid? Don’t count on it.
The LA Times links are dead, thanks to the passage of time. A Nexis search confirms that the article ran on January 28, 2007 (the Sunday edition articles get released on the Internet early), written by Chuck Neubauer and Tom Hamburger, titled “A Deal in the Desert for Senator Reid?” The article also includes this interesting portion, emphasis mine:
How good a deal did Reid get? Paying $166 an acre for Mohave County land is “a super deal,” said the county assessor, Ron Nicholson. But the precise answer in this case, Nicholson said, is complicated by the fact that only a minority portion of a partnership was for sale; minority shares can be difficult to sell. Other experts who reviewed the transaction for The Times acknowledged the complexity of the deal but said the senator appeared to have acquired valuable property for a fraction of its value.
“The price strikes me as low,” said professor Crocker H. Liu, McCord chair of real estate at Arizona State University’s W.P. Carey School of Business. “But I don’t know what other considerations — valuable or otherwise — were part of this transaction. Usually when a purchase price is that low, there is other juice in the deal.”
New questions are being asked about the ethics of Sen. Harry Reid; a Utah businessman is alleging that his state's attorney general demanded $600,000 as a bribe to Reid in exchange for dismissal of a federal investigation.
Certainly the allegations could be false, but it's worth noting this isn't the first time Reid's name has come up in connection with some pretty shady propositions. Remember the lucrative, underpriced land deal? Or the green energy conflict? There's so much there, pithily summed up by Investors Business Daily as follows:
. . .shadowy years he ran the Nevada Gaming Commission, through his public embarrassment over the Los Angeles Times investigation into his son and son-in-law's Washington lobbying activities,the ethics investigation into the free tickets Reid happily accepted to boxing matches and the successful land development deal that ended up netting Reid $1 million when he sold it, in an amazing coincidence, to a friend and it became a shopping center.
As a general matter, it's right to wait until serious allegations are actually substantiated before repeating them. But in the case of Harry Reid, an exception is entirely warranted.
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