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Cindy McCain and Sen.
John McCain |
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Wife's Beer Company could cause
Headaches for McCain
PHOENIX ( By
Ralph Vartabedian, LATimes) June 22,
2008
―
Hensley & Co., one of the nation's
major beer wholesalers, has brought
the family of Cindy McCain wealth,
prestige and influence in Phoenix,
but it could also create conflicts
for her husband, Sen. John McCain,
if he is elected president in
November.
Hensley, founded by Cindy McCain's
late father, holds federal and state
licenses to distribute beer and
lobbies regulatory agencies on
controversial alcohol issues that
involve public health and safety.
The
company has argued against such
groups as Mothers Against Drunk
Driving in fighting proposed federal
rules that would require alcohol
content information on every package
of beer, wine and liquor.
Its executives, including McCain's
son Andrew, have written at least 10
letters in recent years to the U.S.
Treasury Department, have
contributed tens of thousands of
dollars to a beer industry political
action committee and hold a seat on
the board of the politically
powerful National Beer Wholesalers
Assn.
The company has also run afoul of
health advocacy groups that have
tried to rein in appeals to young
drinkers. Hensley, for example,
distributes caffeinated alcohol
drinks that public health groups say
put young and underage consumers at
risk by disguising the effects of
intoxication.
The involvement of his wife and
children in federal regulatory
issues could create a conflict of
interest for a future McCain
administration, according to
advocacy groups and political
analysts. McCain has recused himself
for many years on alcohol issues in
the Senate, recognizing the
potential conflict. As president,
however, McCain would face far more
difficulty distancing himself from
an issue with such broad scope.
Cindy McCain holds the title of
chairwoman in the company and
controls about 68% of the privately
held company stock with her children
and the senator's son, according to
records at the Arizona Department of
Liquor Licenses and Control. Cindy
and John McCain keep their finances
separate, and he has no interest or
role in Hensley.
In an interview in May, she said she
"knows everything that is going on,"
communicating with her executive
team every day. She added that she
does not need to be physically at
the company headquarters to be in
charge. So far, she has given no
hint of what changes, if any, she
envisions in the future.
"That's very premature," she said.
If her husband is elected president
and she retains her current role at
Hensley, she would set a precedent
for outside corporate activity by a
first lady.
The McCain campaign Friday issued a
statement about the issue saying
that "any decisions going forward
will be made when John McCain wins
the election and takes office, and
not before." Hensley executives
declined to comment on the matter.
Political analysts said they are
astounded that the presumptive
Republican nominee has not already
addressed the issue.
"You can't run a beer company out of
the White House," said Samuel Popkin,
a political science professor at UC
San Diego. "You can't run any
company from the White House. McCain
is leaving a live hand grenade on
the table, a major embarrassment."
Public interest groups that lobby on
alcohol issues say it would be
clearly inappropriate for the McCain
family to continue running or owning
the company if McCain is elected.
"In a lot of government agencies,
there is a concern about undue
influence played by a regulated
industry," said Chris Waldrop,
director of the food policy
institute at the Consumer Federation
of America. "But it has not been to
the point that the president's wife
owns a majority share of a company
that is lobbying an agency."
Indeed, apart from its potential to
create a conflict of interest, the
mere ownership of the beer
distributorship could turn off some
social conservatives and those who
object to alcohol use.
About a third of Americans abstain
from drinking any alcohol, and half
either abstain or consume one or
less drink per month, according to
the National Institute on Alcoholism
and Alcohol Abuse.
For some, abstinence ― and a
disdain for the industry ― is
taught by their religion. Leaders of
the Southern Baptist Convention,
which has more than 16 million
members, expressed "a total
opposition to the manufacturing,
advertising, distributing and
consuming of alcoholic beverages,"
according to the church's most
recent resolution on the matter.
"I am sure for some individual
Southern Baptists, the McCain
family's involvement in the beer
business would be a concern," said
Roger Oldham, vice president of
Southern Baptist Convention
relations.
A close look at Hensley shows that
the company has opposed reforms that
beer industry critics say were
intended to help Americans drink
responsibly.
Hensley's lobbying activities have
put the company at the center of a
battle that has raged between the
beer and liquor industries since
Prohibition ended. Under federal
law, liquor is taxed more heavily
than beer and must contain a label
that discloses alcohol content by
percentage or proof. Beer and wine
containers have no such disclosure
requirement, despite wide variances
in their alcohol content.
Public interest groups have
petitioned the Treasury Department
in recent years to require every
container of beer, wine or liquor to
carry a label telling exactly how
much alcohol is contained in one
standard serving.
The Center for Science in the Public
Interest, the Marin Institute, the
Consumer Federation of America and
Mothers Against Drunk Driving, among
others, assert that such information
would help Americans drink
responsibly and avoid drunk driving.
The label would also contain
information about calories and other
nutrition.
But the beer industry has argued
that it would confuse consumers.
With backing from Hensley and
others, it has persuaded the
Treasury Department to withdraw the
alcohol content disclosure from any
future label requirement.
"We strongly oppose any proposal
that would back a display of alcohol
content in terms of fluid ounces or
pure alcohol per standard serving,"
wrote Andrew McCain, the senator's
son. The 2005 letter was sent to the
Alcohol and Tobacco Tax and Trade
Bureau, a unit of the Treasury
Department. Andrew McCain is chief
financial officer at Hensley and
owns 6.8% of the stock, according to
Arizona records.
Similar but not identical letters
were written by Robert Delgado,
chief executive of the company, and
other senior executives. Hensley
executives have also contributed
heavily to the politically powerful
National Beer Wholesalers Assn.,
which operates the nation's
seventh-largest political action
committee and has argued against the
label. Delgado alone has donated
more than $20,000 to the group since
2004.
McCain has avoided problems in the
Senate by recusing himself on
alcohol issues, according to
executives at the Distilled Spirits
Council, the liquor industry's trade
association.
"Sen. McCain has been very, very
fair to this industry," said Frank
Coleman, senior vice president for
the council. "He stays an arm's
length away from issues that benefit
the family business."
While that has worked for his job in
the Senate, a president can not
recuse himself or his administration
from public policy issues as broad
as alcohol, which is regulated by
such departments and agencies as
Treasury, the Federal Trade
Commission, Health and Human
Services, and Transportation, among
others.
"It is going to be a very difficult
high-wire act for the McCain
family," said Bruce Lee Livingston,
executive director of the Marin
Institute, a nonprofit watchdog
group in San Rafael. "The big
question is how much access the beer
industry is going to have to the
White House. You would expect the
president and first lady to be
concerned about alcohol abuse and
alcoholism. The first lady and the
president need to have a bright line
between the White House and the
alcohol industry."
Aside from the labeling issue,
Hensley has begun distributing
controversial products known as
flavored malt beverages, which
critics call "alcopops" because they
mask the taste of alcohol. The
product was pioneered by liquor
makers about a decade ago. The beer
industry, including Hensley, tried
to block the liquor industry from
entering the business but lost the
fight.
Doug Yonko, a Hensley vice
president, wrote the Treasury on
that issue in 2003, asking the
agency to avoid dealing "a severe
blow to beer wholesalers" by
allowing the liquor industry to
enter the business. But in 2006, the
Treasury classified the flavored
beverages as beer, even though up to
49% of the alcohol could come from
distilled spirits.
The beer industry, including
Hensley, has responded by moving
into the market itself with such
products as Tilt, a caffeinated
liquor made by Anheuser-Busch.
Critics say the product is directed
mainly at youth and can leave them
wide awake without knowing they are
intoxicated. Other flavored malt
beverages contain sweet fruit
flavors that block the taste of
alcohol.
"These products are starter
beverages, intended to introduce
consumers to alcohol and alcohol
brands," said George Hacker,
director of alcohol policies at the
Center for Science in the Public
Interest.
What exactly Cindy McCain can do to
avoid such controversy is not clear,
but a wide range of public interest
groups say she should separate
herself and her husband from Hensley
― no doubt a difficult and
emotional issue for any heir to a
family business.
Charles A. Hurley, chief executive
officer of Mothers Against Drunk
Drivers, said McCain has been
careful in the past to recuse
himself on MADD issues, but the
organization would be watching
carefully if a future administration
of his exercised influence on any
alcohol issues.
"I believe she would have to put
that stuff in a blind trust of some
kind," Hurley said, "where she would
not be involved."
Other experts, however, question
whether a blind trust would go far
enough to insulate a McCain
administration, since the ownership
would still benefit the family.
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