Bill Simon, Jr.’s campaign to unseat Gray Davis, the unpopular
governor of California, may live to play another day, but don’t
count on it.
When, week before last, a jury levied $78 million in damages
against the Simon family’s investment banking firm it was the
latest case of Murphy’s Law (Anything That Can Go Wrong Will) at
work. Other examples: Weeks passed before he made a limited release
of his tax returns, fueling suspicions he had something to hide (he
didn’t). Despite having clever television spots which satirize
Davis’s $23 billion state budget deficit and his well-known
shakedown of constituent groups for contributions, Simon hasn’t
raised enough money to run them with sufficient frequency to
counter Davis’s negative spots on him. Result: Simon’s
“unfavorable” ratings have gone from 24 to 39 percent.
No matter how flawed the jury’s verdict or whether a quick
appeal reverses the award, the story has had the legs of a
centipede in the California press and the perception is set that
this whiz-bang business man was somehow involved in fraudulent
activities. Simon insists his involvement was peripheral; however,
an internal William Simon & Sons memo of September 15, 1998
about investment in Pacific Coin, the plaintiff’s company, has a
number of margin notes in his handwriting, indicating keen interest
in details of the deal.
His non-involvement argument doesn’t hold water and, worse, well
after his firm arranged the investment in Pacific Coin (an operator
of pay phones), it was learned that its chief executive, Paul E.
Hindelang, was a convicted felon, having pled guilty in 1981 to
charges that he was part of a big-time marijuana smuggling ring. He
was convicted of bringing in half-a-million tons from Colombia and
conspiring to bring in another 150,000 tons. At the time of his
plea he forfeited $640,000 in drug proceeds. Federal agents
suspected he had secreted away much more money. By 1997 they had
found it in Swiss bank accounts. By coincidence, at the time
Simon’s company was negotiating to invest in Pacific Coin,
Hindelang was on his way to Miami to meet with federal prosecutors
to turn over $50 million of his ill-gotten gains.
Simon, himself a one-time prosecutor, now looks foolish for (a)
appearing to be either uninvolved in business decisions or
prevaricating about his involvement, and (b) failing to conduct
“due diligence” on Hindelang. Either way, Murphy’s Law undercuts
his central campaign message that his business savvy will bring
fiscal discipline to California.
Meanwhile, back at the White House, President Bush and his
advisers await the results of a poll of Californians conducted by
the Republican National Committee over the course of the last few
days to determine if the Simon candidacy is still viable.
If they decide it is not, they will not say so. Bush will honor
his commitment to do three fund-raising events in California on
August 23 and 24. Two are to be at private homes and one at a
hotel. The press will not be invited and there will be no
arm-in-arm photos with Simon. Then, Bush and the White House will
silently turn away from the campaign, stating, when asked, that yes
the president still wishes Simon well — but that will be all.
If Bush were to cancel his California appearances it would be an
instant death knell for the Simon campaign. Worse for Bush, it
would revive charges (levied against him in 2000, Bob Dole in 1996
and Bush père in 1992) that the national leadership is once
again writing off California.
On the other hand, if the conclusion from the poll is that Simon
can still win, he will have a very steep hill to climb, and there
is still danger in it for Bush. Bush has been deft in putting
distance between himself and the cluster of corporate scandals that
have been splashed across the nation’s front pages for weeks. By
quickly getting behind the Senate bill tightening corporate
governance and accounting and signing it, Bush once again robbed
the Democrats of an issue. Yet, getting too close to Simon,
whatever the merits of his side of the Pacific Coin case, risks
undercutting Bush’s war on corporate wrongdoing.
Peter Hannaford is the publisher of The American
Spectator.
