Marc Morano, CNSNews.com
Tuesday, Aug. 13, 2002

Frank Savage is considered one of the most generous African-American donors to Democratic Party causes, but in light of Enron's bankruptcy, is also characterized by one critic as a "shameless" personification of the recent American corporate scandals.

The Bush administration, receiving conflicting advice from prominent African-American politicians, recently extended Savage's term as managing general partner of the Africa Millennium Fund, sponsored by the federal government's Overseas Private Investment Corp. (OPIC).

The fund will pay for infrastructure projects in sub-Saharan Africa dealing with energy, telecommunications and transportation. It "represents OPIC's largest single financing commitment to date," according to an Aug. 8, 2001 press release issued by the investment firm, Alliance Capital International, which Savage was chairing at that point but was about to leave to take up the position with OPIC.

U.S. taxpayers are due to pick up $227.5 million of the $350 million tab to provide a guarantee for private investors who, at Savage's urging, are supposed to come up with the remaining $122.5 million. Those private investors are being promised a 30 percent internal rate of return, which includes both income and capital appreciation. Savage's original deadline for raising the private funds was the end of June, which he missed. OPIC recently extended the deadline to Sept. 30.

Ties to Gore, Hillary, Schumer

Time magazine, in a Jan. 14 article, called Savage "a major Democratic donor" who had given at least $100,000 to Democrats since 1999. Among the beneficiaries of Savage's contributions were presidential candidate Al Gore and Sens. Hillary Clinton and Charles Schumer of New York.

As a result of those political activities, some observers wonder why the Bush administration would keep Savage in such a high-profile position. Savage's involvement in the Enron scandal also makes him a liability to the administration, those observers say.

'Savage's Record Is Appalling'

In a June article published by The American Prospect, journalist Joshua Green called Savage "an authentic bad apple" for his past role as a member of Enron's board of directors and for his influence over the Florida state pension fund as chairman of Alliance Capital.

Green, who also edits The Washington Monthly magazine, wrote that "Savage's record is appalling, even by the standards of Enron board members."

The Florida state pension fund lost $334 million while Savage's firm, Alliance Capital, managed the fund. Under Savage's supervision and using the Florida pension funds, Alliance Capital became Enron's largest institutional investor. When Enron's stock plummeted as a result of its accounting scandal, so did the value of the Florida pension fund. Green wrote that Savage "wasn't just asleep at one switch - he was asleep at two."

Florida state officials sued Alliance Capital for negligence in May of this year.

However, according to Green, Savage was "shameless" after the Enron scandal became public.

"Not only did he decline to forego his $70,000 a year spot on Enron's board, he refused to step down from the boards of Qualcom and the Lockheed Martin Corporation, despite a shareholder campaign [led by the AFL-CIO] to remove him," Green wrote.

Savage will "serve as a reminder of the need for corporate responsibility," Green added.

Kevin Martin, political and government affairs director for the African American Republican Leadership Council, believes the Bush administration selected Savage because it was trying to heal the political turmoil left over from the hotly contested 2000 Florida election results.

Using 'Sellout' to Make Nice With Democrats

"By having Savage work on this project, that was just one of [President Bush's] ways of attempting to make peace with Democrats," Martin said.

Martin, who believes the administration's peace-making efforts failed, is also critical of Savage.

"He is one of these African-American Democratic sellouts who is more interested in photo-ops and fundraising than the betterment of the community," Martin said.

'Abuse of Federal Authority'

Howard Phillips, chairman of the Conservative Caucus, explained why he believes OPIC selected a Democrat such as Savage to lead the Africa Millennium Fund.

"As usual, they are sucking up to people who despise them," Phillips said.

Phillips believes OPIC's mission in Africa is "comprehensively unconstitutional." He said the fund was using U.S. taxpayers as "the insurer of first resort" and likened Savage's role as manager of the fund to the recent corporate scandals.

"I would characterize it as insider trading. Here is a guy who has contacts with people who are running a government agency and they are in effect using the credit of the taxpayer as political patronage," Phillips explained.

"The very concept is an abuse of federal authority. It's not unlike Enron cheating its employees and shareholders," he added.

A source inside the Bush administration told CNSNews.com that Rep. J.C. Watts, R-Okla., was unhappy with the original selection of Savage to head the Africa Millennium Fund and was further upset when Savage was given his recent fundraising extension. However, a spokesman for Watts had "no comment" about Savage when contacted by CNSNews.com.

Powell, Bloomberg Intervene

The Bush administration source also said Secretary of State Colin Powell and Republican New York City Mayor Michael Bloomberg lobbied to have Savage's deadline extended. Both men have previous ties to Savage.

Powell served on the board of trustees for Howard University in Washington, D.C. when Savage chaired the panel. Savage also is on the board of directors for Bloomberg L.P., the company the mayor headed before taking office.

Several attempts were made to contact Savage, but his office said he was unavailable for comment.

OPIC spokesman Larry Spinelli told CNSNews.com that the fundraising extension did not reflect poorly on Savage. Spinelli instead pointed to the uncertain economic climate as the reason for Savage's failure to raise the private funds needed for the Africa Millennium Fund.

"These people were going out raising money in the aftermath of 9-11, in which it was virtually impossible to raise any money," Spinelli said.

Spinelli added that the extension granted to Savage was "a very regular routine thing" to give him "some extra time to raise money."

'Lack of Confidence'

The Bush administration official who spoke on condition of anonymity told CNSNews.com, "The inability of Savage to raise money with a government guarantee speaks volumes for the lack of confidence that institutional investors feel toward him."

Phillips noted that Savage would not need U.S. taxpayers to support the Africa Millennium Fund if it was engaged in projects that are financially viable.

"If the investments were sound, private banks and companies would insure them. You wouldn't have to have Uncle Sucker take the hard working money from two-earner families to pay for this garbage," Phillips said.

Copyright CNSNews.com

Read more on this subject in related Hot Topics:

Bush Administration

Corporate Scandals

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