The Fixer: Lanny Davis Represents Union Busters, Dictators, and Now For-Profit Schools
The most heated policy battle over higher education today concerns the Department of Education’s effort to create rules that protect students and taxpayers from well-documented abuses and shortcomings by for-profit schools. To help lead an army of lobbyists and consultants working to block these rules, key members of the for-profit industry have selected as their general Lanny Davis, who served as a White House lawyer for President Bill Clinton. Davis’s new client is the Coalition for Educational Success (CES), an umbrella group of for-profits, which includes the well-known Art Institutes as well as the more obscure Golf Academy of America and Marinello School of Beauty. Recent lobbying documents show that that CES has already spent $40,000 this year for lobbying on their behalf.
The Education Department issued its new regulations on Thursday, addressing many of the key issues but deferring for several months the most important matter—the final “gainful employment” rules aimed at cutting off federal financial aid to educational programs that produce high rates of student debt and low hiring rates for students. Yesterday, Davis held forth on a call with reporters and claimed the new regulations were "rushed" and that the Department should take more time to evaluate the more than 90,000 comments received during the comment period.
But Davis’s clients won a partial victory in this round. The Department dropped a proposed rule that would have required schools seeking to start new programs to obtain prior approval in order to be eligible for federal aid; instead, schools will be required to notify the Department, which can then seek more information if it has concerns. Davis, it seems, was pleased. The Washington Post noted that Davis thought the updated regulations were a "step in the right direction." [Disclosure: Campus Progress’ advocacy team is working actively for enactment of regulations imposing tough accountability standards on the for-profits.]
When Davis first joined this debate, it was as a commentator, writing what looked like an opinion piece on June 23 for the newspaper The Hill. Davis attacked "a noted Wall Street short-seller, Steve Eisman" for criticizing for-profit schools without disclosing that he (Eisman) had made financial bets against the schools. But did Davis himself have a disclosure issue here? Perhaps he had not yet entered into discussions with the for-profits to be their paid advocate. Perhaps he was simply auditioning for the lucrative assignment. Or perhaps in a world of critical policy issues on which he could comment, Davis acted solely out of conviction in penning this tribute to schools that have left many students deeply in debt and without marketable skills. In any case, Davis registered as a lobbyist for CES on Sept. 17.
Davis is well-known in Washington, probably reaching the height of his fame when he helped defend President Bill Clinton during his impeachment battle. For most of his career, he has worked at law firms, lobbying on behalf of numerous clients and some questionable causes. Here are some examples of his work:
- Davis was hired by corporations in the successful effort to derail the Employee Free Choice Act, which would strengthen protections for labor unions. [The Huffington Post, Aug. 10, 2009]
- In 2009, Davis' law firm, Orrick, Herrington, & Sutcliffe, represented a client, CEAL, the Honduras branch of the Business Council of Latin America. The organization succeeded the Alliance for Progress and Development of Honduras (APROH), which is largely credited with backing a bloody coup in Honduras and committing egregious human rights violations. Robert White, a former U.S. ambassador and now president of the DC-based Center for International Policy, told The American Prospect, "If you want to understand who the real power behind the [Honduran] coup is, you need to find out who's paying Lanny Davis." An activist involved with the Center for Women's Rights in Honduras said, "Mr. Davis is trying to legitimize people who use psychological intimidation and violence. He's representing the interests of state terror." Davis is widely credited with shoring up support for the new regime on Capitol Hill. Davis also appeared on Amy Goodman's Democracy Now!program to defend his involvement with Honduras. [The American Prospect, July 22, 2009] [The Huffington Post, Aug. 10, 2009]
- Earlier this year, Davis took $1 million to rebrand Teodoro Obiang Nguema Mbasogo, the reportedly corrupt president of the oil-rich West African country Equatorial Guinea. The country has been accused of engaging in human rights violations and holding political prisoners. [The New York Times, June 28, 2010]
- In 2002, HealthSouth Corporation was accused of fraud by the Securities and Exchange Commission. The company was charged with erroneously billing Medicare for a therapist giving single-patient treatment when they should have been billed as treating several patients at one time. Davis was hired to represent the company. [The New York Times, Sept. 20, 2002]
- When voice recognition software company Lernout & Hauspie was involved in an accounting scandal that got the Securities and Exchange Commission investigating its inflated revenue numbers, they called Davis. At the time, Davis explained his PR strategy to a reporter at Forbes: He would divert writers about to cover bad news surrounding the company with a positive, forward-looking pitch. Davis called this "bad-news padding." [Forbes, Nov. 27, 2000]
- The Israel Project, which has come under scrutiny for pushing its pro-Israel views into the deepest corners of power in Washington, has also employed Davis as a lobbyist. The group advertised him as available to speak to the press, touting his connection to former President Clinton. [The Israel Project, Jan. 12, 2009]
Update: Campus Progress contacted Davis for comment about this piece on Friday. Davis clarified that he was not contacted by CES until September of this year and denied that he was "fishing for business" when he wrote his article for The Hill.
To the Director of Campus Progress, David Halperin:
The editor of CampusProgress.org, Kay Steiger, and you both told me you believed it was acceptable and fair to post a story, including one that quotes others making disparaging personal characterizations about me, before checking the facts or before at least trying one call or email to me to try to obtain a response.
You both justify this decision to not seek my comment ahead of publication on the grounds that your post was not based on new original reporting of facts but instead relied on reporting already published in established media outlets.
But why not try to call or email me before publication to check truthfulness? I asked, wouldn't that be more fair? Well, you both said, we called you after publication and that is sufficient.
I respectfully disagree with that approach.
I submit that other respected journalists, websites, and bloggers would also disagree with your approach -- both as a violation of journalism 101 ethics standards as well as principles of basic decency and fairness.
Moreover, it is misleading to publish one fact that seems negative without publishing other facts that are positive -- especially a fact or facts that can easily be ascertained in published material or by calling the subject.
But you have allowed me to submit a post to clarify points in Ms. Steiger’s piece and, in my opinion, the misleading headline, which I appreciate.
Had Ms. Steiger called me before publishing, I could have corrected the following what I believe to be false or misleading (due to the omission of material facts) assertions disparaging me and my clients:
1) By first calling me, Ms. Steiger could have avoided her speculative (and innuendo-loaded) questions about whether I represented for-profit career colleges when I wrote my regular weekly Thursday column, "Purple Nation," in The Hill newspaper in mid-June 2010, and thus, had that been so, wrongly failed to disclose such client relationship in my column. In fact, I did not represent any for-profit career colleges client in June when I wrote the column. I was hired to represent a coalition of such career colleges about three months later, in September. I never contemplated that future engagement when I wrote the column in June. Those facts were omitted from Ms. Steiger's piece.
--The main message of the column I wrote in June was contained in the headline -- that short sellers should be subject to transparency too. The column's focus was calling for full disclosure on his short positions in the for-profit career college industry by Steven Eisman, a short-seller famous from the book, "The Big Short," based on the short sellers who made big money betting against the sub-prime mortgage companies. Eisman had given a speech the month before comparing the for-profit career colleges the next "sub-prime" meltdown business sector. Immediately after his speech, 10 out of 14 public companies who owned for-profit career colleges declined, making money for Mr. Eisman if he were short in those companies, as there was good reason to believe. The morning of my column, Mr. Eisman was due to testify before Senator Harkin's Senate Health, Education, Labor and Pensions Committee, virtually re-stating the same anti-for-profits colleges attacks as his speech the month before. My column focused on Senator Harkin's obligation to require Mr. Eisman to fully disclose the short positions he held in the companies he was criticizing, in the name of transparency. (He never did specifically disclose those company positions but only generally that he was "short" in the for-profit industry -- nor did Senator Harkin, the Committee chair, ask him for such full disclosure.)
--Nor is this a new topic for me, written for the first time in June 2010. For many years I have publicly called for such full disclosure by shorts (such as when I organized the "Full Disclosure Coalition" on behalf of several clients some eight or nine years ago, an effort widely publicized in USA Today and elsewhere.)
--Since September I serve as a public spokesman (and lobbyist) on behalf of a coalition of for-profit companies who agree that abuses in recruiting and excessive student debt should be addressed, but across-the-board, not just at for-profit career colleges. I also wrote two pieces in the Huffington Post pointing out that the Department of Education's proposed "gainful employment" regulations supposedly written to address these concerns were over-broad, sloppily worded, and, in the name of some needed reforms across-the-board (not just among for-profit career colleges), could produce unintended consequences (especially from a progressive Democratic administration)--i.e., disproportionately hurting the lower income and minority students who predominantly attend for-profit, career colleges. See my two Huffington Post pieces -- "The Liberal Paradox” and "Let's Stick to the Facts," published in September and October 2010, respectively.
2. It is true I represent the government of Equatorial Guinea ("EG"). But had Ms. Steiger checked my FARA filing or the public record, much less called me, she could have reported that, as my contract publicly disclosed in the FARA filing stated, that:
--I serve as a legal and technical advisor to the EG government on implementing a broad program of transparency and legal, political, and economic reform;
-- that this program was announced and committed to by the EG president, Teodoro Obiang, in a speech I helped draft that was delivered at the June 28, 2010 Fortune-CNN-Time Magazine Global Forum in Cape Town, South Africa (reported in the same NY Times article referred to in her piece by Ms. Steiger); and --that in August 2010, as has also been publicly reported but omitted by Ms. Steiger, Nobel Peace Prize winner Archbishop Desmond Tutu wrote the EG President Obiang, praising his June 28 "transparency and reform" speech and offering to assist him in implementing this reform program.
3. It is false that I defended "union busters" as the headline of the article states.
The following facts, which I consider to be indisputable, were omitted from the article:
--I represented and registered as a lobbyist for "The Committee for a Level Playing Field." The Committee comprised just three companies -- Whole Foods, Costco, and Starbucks. None of these companies can accurately be described as "union busters," as that term has historically been used. While I believe that some of these companies have had union elections at various locations and virtually all of these elections resulted in unionization being rejected by workers voting by secret ballot, at least one of the three companies on the Committee (Costco) has some unionized workers.
--All three companies that comprised the Committee are progressive companies that, for example, provide their workers paid-for health insurance coverage and other benefits.
--The Committee for a Level Playing Field opposed the "card check" concept because it did not include an obligatory secret ballot vote provision--a bedrock principle of democracy and voting free from possible external pressures or intimidation by management or unions. I personally agree with that bedrock principle -- as did FDR and Senator Wagner when the historic Wagner Act was first enacted in 1935.
The fact is, the Committee also supported meaningful pro-union reforms in current labor law -- such as guaranteed reasonable access to the work place for union organizers to make their case for unionization -- a reform long favored by organized labor. The labor law reforms supported by the Committee were widely published on the Internet, including a major article in the Washington Post.
I am sorry that my request was not accepted to take the phrase "Union Busters” out of the headline.
(Incidentally, I am, and always will be, a pro-labor, pro-union liberal Democrat.)
4. The article strongly inferred that I represented business interests in Honduras that supported the forced deportation of the former and then incumbent president of Honduras, Emanuel Zelaya, without due process. This inference is false - as documented in the public record in testimony in July 2008 before the House Subcommittee on Latin American Affairs. In that testimony, I criticized this deportation as wrong and as a violation of due process rights. I publicly criticized on behalf of my clients that middle-of-the-night deportation on many other occasions.
My client that supported this testimony and this position was the Honduras branch of the Latin American business counsel (called CEAL), comprising about 20 legitimate businesses in Honduras, equivalent to a local U.S. chamber of commerce group. I know nothing and never heard of the "Alliance Progress and Development in Honduras," which is cited by Ms. Steiger in her article from a source as a "predecessor" of CEAL and which allegedly was involved in human rights violations. Nor is it true, as an anonymous "activist" is quoted by Ms. Steiger from another Internet publication, that I was "trying to legitimize people who use psychological intimidation and violence" and that I was "representing the interests of state terror." I was trying to do no such awful thing - nor would I ever.
I also pointed out and wrote publicly the following indisputable facts omitted from your article:
-- that Mr. Zelaya was removed from his office of president by unanimous order of the Honduran Supreme Court and overwhelming vote of the Honduran democratically-elected Congress, BOTH of which were controlled by Mr. Zelaya's Liberal Party; and
-- that his removal from office for violating Honduras's constitution was also supported by his own Attorney General, the independent Human Rights Commissioner, and the famous progressive Cardinal of Tegucigalpa -- famous for caring for the poor.
5. The article falsely stated I was "employed" by The Israel Project (TIP). While I admire TIP as a moderate group that supports a two-state solution for Israel and Palestine, as I do, I only briefly served as a volunteer spokesman during the time of the Gaza intervention and that's all. That sloppy factual error, while not a big deal to me, could have been avoided by a simple phone call by Ms. Steiger ahead of time.
6. Finally the article correctly stated I represented two companies, HealthSouth and Lernout & Hauspie, that whose executives were accused (and some ultimately found guilty) of committing accounting fraud. This is true. But omitted was the material fact that in each case I recommended an external independent investigation, committed ahead of time to the S.E.C. to turn over the results of the investigation and to waive attorney-client privilege, and did so.
# # # # #
I do not impugn the motives or sincerity of you or Ms. Steiger. You were patient and gave me a fair hearing during several phone conversations, as did counsel to the CAP, Debbie Fine. I appreciated their giving me the time and their patience. I still admire the work CAP does and greatly admire its president, John Podesta, as fellow progressive and a friend for some 40 years.
But the issue raised by my comments, which you have graciously allowed me to post, raise important, indeed in my judgment profound, issues regarding rules-of-the-road on the Internet:
Do basic rules and standards of Journalism 101 apply -- i.e., check the facts and the truth matters?
If not (and I believe they should since publication on the Internet can do such damage due to the Google misinformation eternal echo chamber), then should standards of common decency, civility, and fairness apply?
And if they should, isn't it just plain wrong to publish and post first, and then ask the subject of a disparaging attack to respond after?
I think so.
I hope by airing this larger question of standards of fact-checking and the right-to-reply before publication on the Internet websites and blogosphere, using my experience with Campus Progress as a case study, example, I can encourage a constructive debate on this issue.
--Lanny J. Davis
Editor’s Note: Campus Progress has published Lanny Davis’s response in full.
Davis raises an important question about what circumstances suggest or require a publication to seek comment from individuals discussed in a piece, a question that we continue to review at Campus Progress.
As Davis notes we told him, we did not seek comment ahead of publication because our post was not based on new reporting but instead collected information already reported by respected media outlets. Nevertheless, we later decided that, because the piece did raise serious questions about Davis’s conduct and motives, it was appropriate to reach out to him for comment, and we did so. (The piece was published at 7:00 pm on Thursday, October 28, and we contacted Davis at 9:20 am on Friday, October 29.)
In the interests of understanding Davis’s position and advancing a productive discussion, we asked Davis whether the question he raised – when a publication should seek a comment from the subject of an article -- could also apply to his piece in The Hill, which Campus Progress cited in our blog post. In that piece, Davis wrote critically about the actions of investor Steve Eisman, who publicly criticized for-profit schools in several forums. Davis wrote, “Stories appeared shortly after [Eisman’s] speech that the share values of the companies that Eisman had criticized dropped immediately and considerably—and that Eisman had ‘shorted’ these stocks, and thus profited handsomely.” Davis noted that Eisman, in a New York Post op-ed and in written testimony to Congress about for-profits, did not disclose his stock positions. Davis called our inquiry “a fair point.” He acknowledges that he never called Eisman for comment on the allegations in the Hill piece; he said he did not call Eisman because his piece was not criticizing Eisman’s motives, only his actions.
Kay Steiger is the editor of CampusProgress.org.
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