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The scandal surrounding Virginia Gov. Bob McDonnell and his family deepened on Wednesday when reports surfaced that a prominent businessman donated $70,000 to a corporation owned by McDonnell and his sister. The alleged gifts provide the first public example of how payments offered by Star Scientific CEO Jonnie Williams may have benefited the governor, and not just his family, directly. We find out what these latest developments could mean for McDonnell’s political future and for the political climate in Richmond.
- Rosalind Helderman Reporter, The Washington Post
MS. CHRISTINA BELLATONIFrom WAMU 88.5 at American University in Washington, welcome to "The Kojo Nnamdi Show," connecting your community with the world. I'm Christina Bellatoni of the PBS News hour sitting for Kojo. Later in the broadcast, it's Food Wednesday, how hard is it to find a table for a night on the town?
MS. CHRISTINA BELLATONIBut first, setting the table for scandal in Richmond. Virginia Governor Bob McDonnell has been hounded for months by reports that his family accepted gifts from a prominent businessman without properly disclosing them, gifts that are now the subject of state and federal investigations.
MS. CHRISTINA BELLATONIThe plot thickened considerably today. The Washington Post reported that Star Scientific CEO Johnny Williams Senior allegedly gave $75,000 to a corporation owned by McDonnell and his sister without the governor disclosing the money as a gift or a loan and that the first family has benefited from more than $100,000 in payments from Williams in recent years.
MS. CHRISTINA BELLATONIAll this news comes as a federal grand jury prepares to hear testimony on the matter this week and as rumors continue to swirl about McDonnell's political future. Joining us now from Richmond is "Post" reporter Rosalind Helderman. She's covered Virginia politics for years and has been closely following this story. Thanks so much for coming on the program.
MS. ROSALIND HELDERMANThanks so much for having me.
BELLATONIThanks, so let's start with who is Williams Senior and what his relationship with Virginia Governor Bob McDonnell?
HELDERMANSo Johnny Williams is a businessman, he's got businesses based in the Richmond suburbs called Star Scientific. Once upon a time Star Scientific was called Star Tobacco and it was a small tobacco company. The products they were trying to sell were sort of more healthy alternatives to standard cigarettes.
HELDERMANIn recent years they've transitioned to a dietary supplement company. They're now trying to sell a pill made from a chemical that's found in tobacco that's the nexus that they say is an anti-inflammatory. Somehow, and we don't entirely know how, he became friendly with the governor and the first lady.
HELDERMANThe governor has said that he has known Mr. Williams for four or five years which would mean that they met shortly before his 2009 run for governor and apparently they've become very close friends. The governor now calls them family friends with Mr. Williams and his wife.
BELLATONIAnd you've covered this extensively but one of the things that has come out over the last few months is that the governor and his wife took money from Williams to help cover the cost of his daughter's 2011 wedding at the Governor's Mansion. Governor McDonnell obviously took office in 2010 after winning his seat in 2009.
BELLATONISo you write today about these payments to McDonnell's corporation and they're the first example of money provided by Williams that directly benefited the governor himself and not just his family. So what is the nature of this corporation that he owned with his sister and what did you uncover about this financial help?
HELDERMANHis corporation, it is a very small limited liability corporation, it's only officers are the governor and his sister. His sister, like his wife, they're both named to Maureen McDonnell. The name of the corporation is MOBO which stands for Maureen and Bob and the sole purpose of this very tiny corporation is to operate and manage two beachfront properties, the governor, his wife and his sister own in Virginia Beach.
HELDERMANThey rent those out to vacationers and this MOBO does upkeep on the property and makes mortgage payments. What we learned is that in 2012 Mr. Williams made first a $50,000 payment to MOBO and then a $20,000 payment to MOBO.
HELDERMANThere is some contention that it was a loan or perhaps there were some agreed upon terms of the loan. Those terms involved no payments for three years which means none of that money has at this point been returned, but we are told that there was some arrangement that the money would be returned by 2015.
BELLATONIAnd the governor has pointed, before your story came out today, that the gifts that his family received, he's following Virginia's disclosure rules that your family, you don't need to disclose gifts that your family received but what are the disclosure rules that apply in Virginia to loans and how is this situation a little different after what you've uncovered?
HELDERMANSo loans you do actually have to disclose loans to your family members. It requires you to disclose both your personal liability as well as the liability of members of your immediate family. We're told that you do not have to disclose corporate liability.
HELDERMANSo if there is an agreement amongst all parties that this was indeed a legitimate business loan to a legitimate business that is separate from the governor as an individual it may be the case that the law did not require him to disclose it.
HELDERMANThere's an additional payment that we disclosed in the story for the first time which was a $50,000 check written directly from Mr. Williams to Maureen McDonnell. That check came in 2011.
BELLATONIThe wife or the sister?
HELDERMANI'm sorry, to the wife. $50,000 directly to the first lady of Virginia and that came in, actually the check was written on the very same day that Mr. Williams wrote a separate check for the wedding catering. There is a contention that that too was a loan.
HELDERMANAs far as we know, none of that money has been repaid and I don't have any information about whether there was any repayments scheduled or terms for that loan. And there is one notation on the governor's disclosure forms indicating that a member of the immediate family got a loan from medical services, which we are told is the governor disclosing that loan.
BELLATONIAnd on those forms, they're only required to check off a range, that's just sort of what Virginia requires. That's a pretty standard thing that you don't have to give the exact amount.
HELDERMANRight. And it doesn't appear that you're required to name the creditor either so this medical services, was that so vague as to be an attempt to potentially hide the arrangement? That's sort of the kind of thing that I think other people are potentially looking at.
BELLATONISure. And your story also went quite a bit into what this money was actually used for and these properties in Virginia Beach and then another property that they own, I guess, in the Virginia Mountains. So what did you learn about Bob McDonnell's family financial security and how did that shape what we're learning here?
HELDERMANWhat we learned is that the money from Mr. Williams came as the first lady at least, was telling friends that she believed that the couple was facing some financial distress. We don't know a great deal about that, we do know that the corporation, MOBO, which is responsible for the upkeep of that property was having difficulty paying the bills.
HELDERMANIt had taken some previous loans from other McDonnell family members. We're told it took another loan from a family friend, I don't know whom, in 2010 to help make those mortgage payments, to help upkeep those homes so that they continued to, they could continue to rent them out.
HELDERMANAnd it is indeed the case that the governor and first lady took on quite a bit of debt in a very short amount of time. They bought with his sister those two homes which were, had a combined purchase value of $2 million. They also took an ownership stake in this house in the mountains which was $1 million. And they bought their primary home which is in the Richmond suburbs for $835,000.
BELLATONIWe're talking with Rosalind Helderman who is a reporter at The Washington Post who's been very closely following this story involving Virginia Governor Bob McDonnell and we're curious, we'd like to hear from you, you can weigh in.
BELLATONIHow have the mounting stories about Bob McDonnell's relationship with this prominent donor affected your view of him and what do you think they'll mean for his political future? Give us a call at 1-800-433-8850, you can tweet to @kojoshow, get in touch on our Facebook page or, of course, send an email to email@example.com.
BELLATONISo Ros, last week state Senator Chat Peterson who has statewide ambitions has often been a foe of the governor's. He's a Democrat, he essentially called on McDonnell to return his gifts or resign. What are you hearing from other lawmakers and what are the politics at play here, of course, in Virginia you can't seek consecutive terms or run for re-election but this is happening in an election year.
HELDERMANYou know, it's interesting, Virginia does not have a strong tradition of these kinds of problems in politics. No governor has ever resigned from office since they went to a four year term in the 1850s and so this is a very unusual circumstance for Virginia politicians and they don't all seem to know exactly what they want to say about this.
HELDERMANSenator Peterson did make the call that you referenced, it has not been broadly embraced by other Democrats. One other state senator came out this morning and called for him to resign but most Democrats including the Democratic candidate for governor, have been much more hands off than that.
HELDERMANThey would much more prefer to talk about the attorney general's ties to the same donor. He, of course, is running for governor. Republicans from what I can tell are nervous. They're not talking a lot publically but you talk to them, you know, and promise not to use their names and they will say this looks very bad and they're not happy about it all.
HELDERMANNone of them, though, have taken the step of saying that they believe, you know, that they believe what Chap said is correct and the governor should resign. Nothing like that, just a lot of anxiety out there.
BELLATONISure, so you mentioned Attorney General Ken Cuccinelli, of course, the Republican nominee for governor running against Democrat Terry McAuliffe. What are you hearing from the Cuccinelli campaign today? The story has definitely presented him with his own challenges, he held stock in this company before he sold it earlier this year.
HELDERMANYes, you know, mostly we've been hearing about Terry McAuliffe. They've tried to keep their campaign going and focus on other things, this isn't their issue and they think there's plenty of things out there that people should be talking about with their opponent, Terry McAuliffe, and so we've not heard a great deal about them.
HELDERMANThe attorney general has put out a plan to tighten the state's disclosure laws, members of both parties have called for changes to the state's gift and loan laws in the wake of all this. but we're not hearing a great deal from the attorney general today.
BELLATONISo definitely want to get back at the politics of this, but I am curious, what's the status of this federal grand jury investigation. What do you expect to come out of it and what could be the consequences?
HELDERMANYou know, it's hard to say. Federal grand juries are secret, the jurors operate under secrecy, the attorneys operate under secrecy so it's not like we're getting a daily update of their activities.
HELDERMANWe had heard witnesses are allowed, if they wish, to talk about if they've been asked to testify and we had heard that a state delegate had been called to appear this week and a Virginia socialite named Patricia Kluge had been called to attend this week.
HELDERMANWe spent some time outside the courthouse and we haven't seen either of them go in yet and so it's a little hard to know exactly what the status of that means. Investigators or authorities use grand juries to gather evidence. So just because there is one doesn't mean there's going to be charges in this case. That, we'll just have to see with time.
BELLATONISo, and regardless of these investigations, how would you measure the damage that this series of stories has already caused Bob McDonnell and his political brand. I mean, he was very popular governor, unemployment is low in Virginia, he was mentioned as a vice-presidential candidate, possibly a presidential candidate but there's been a lot more than just this story happening in recent months here.
HELDERMANYes. I think there's no doubt that this has taken a toll. There hasn't been a great deal of new polling on the issue. on the last polls I've seen of his approval ratings and his popularity ratings came after the story had broken but very much towards the beginning of the story.
HELDERMANThose polls generally show that his popularity remained very high and a lot of people said that they had not heard of this story and those who did many of them said that they thought it was just politics.
HELDERMANBut I haven't seen anything new and so I don't know if people still think it. having said that I think there is no doubt that this has had a dramatic impact on his future political ambitions. It just is very hard to believe as this point in time that if things stay as they are right now, you know, he could come out unscathed in terms of a possible, you know, vice-presidential or presidential run.
HELDERMANThat said, you know, if he's not charged and after that happens he's able to speak more freely and comes out and gives a full explanation of all these things and people find it compelling, maybe I'm wrong and maybe in a couple of years, you know, we're back with Governor McDonnell running for something else.
BELLATONISure. We had a similar comment about polls coming in an email to firstname.lastname@example.org from David in Fairfax saying, "Is this story too complicated for people to care? The last I saw in the "Post" Bob McDonnell's polling numbers were still pretty good."
BELLATONISo very interesting, Rosalind Helderman of The Washington Post, we will be following all of your reporting. Thanks so much for taking the time to join us today. And when we return from a short break, it's Food Wednesday and we get pro tips for securing a table at the latest trendy restaurant. I'm Christina Bellantoni sitting in for Kojo.
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