Chuck Hagel - Allegations of Inadequate Disclosure and Conflict of Interest

Allegations of Inadequate Disclosure and Conflict of Interest

In Bev Harris' book Black Box Voting,, in an article in The Hill, and in a CommonDreams article by Thom Hartmann, Hagel is accused of having covered up his involvement with American Information Systems, Inc., the voting machine company. Harris alleges that Hagel omitted mention of AIS from the required US Senate financial disclosure forms.. Harris also says that Hagel hid his continuing investment in the McCarthy Group. Harris writes:

In October 2002, I discovered that he still had undisclosed ownership of ES&E through its parent company, the McCarthy Group. The McCarthy Group is run by Hagel's campaign finance director, Michael R. McCarthy, who is also a director of ES&S. Hagel hid his ties to ES&S by calling his investment of up to $5 million in the ES&S parent company an "excepted investment fund." This is important because senators are required to list the underlying assets for companies they invest in, unless the company is "excepted." To be "excepted," the McCarthy Group must be publicly traded (it is not) and very widely traded (it is not)."

Harris contacted Victor Baird, counsel for the Senate Ethics Committee, to inquire into Hagel's disclosure statements. After some investigation, Baird agreed that Hagel apparently mischaracterized the nature of his investment in the McCarthy Group. Soon afterwards, Baird resigned -- Harris suggests, without proof, that Baird was forced to resign -- and Harris was told that he was unavailable to speak to the press. Harris says that Baird's replacement supported Hagel's characterization of the McCarthy Group as an excepted fund.

Harris and Hartmann imply that Hagel's landslide victories in 1996 and 2002 may have been due to election fraud. Harris writes, "Hagel defeated popular Democratic Gov. Ben Nelson, who had led in the polls since the opening gun... becoming the first Republican to win a Senate seat in Nebraska in 24 years... What the media didn't report is that Hagel's job, until two weeks before he announced his run for the Senate, was running the voting machine company whose machines would count his votes.". However, Harris and Hartmann provide no concrete evidence of fraud. All they can point to is circumstantial evidence, such as the unexpected nature of the election upset (Hartmann writes, "Hagel won virtually every demographic group, including many largely Black communities that had never before voted Republican") and the odd fact that the voting machines used to count votes in Hagel's Senate bid were built by the very same company that Hagel had recently chaired and that Hagel continued to invest in. Also, Harris reports that Alexander Bolton, author of the Hill article about Hagel, complained that prominent Republican lawyer Jan Baren and Hagel Chief of Staff Lou Ann Linehan visited The Hill office and pressured Bolton, unsuccessfully, to kill or soften the Hagel story.

The story about Hagel's retaining ownership in the company that counted his own votes, and the matter of the surprising election upset (15 points of disparity between election results and polling results) is retold in an Nov, 2012 article in Harper's Magazine .