John William Snow
As John Snow left his job as CEO of the
transportation conglomerate CSX in 2002 to become the Secretary of the Treasury, his
former company rewarded him by forgiving a $24 million loan and arranging his
pension plan so that he will collect more than $2 million every year for the rest of
his life.
Shortly after he took over at the Treasury, CSX sold a subsidiary
that runs shipping terminals all over the world—Dubai Ports World, a company owned by the
United Arab Emirates—for $ 1 billion. Later, Snow used his position to rubber stamp
a proposed business deal by that UAE company that would have given it control over
terminals at several ports in the United States.
While Snow was CEO of CSX,
the company donated nearly $6 million to politicians, accounting for 85 percent of
the donations made by the entire railroad industry. Most of the contributions went
to Republicans. The company spent more than $25,000 on the Bush-Cheney campaign of
2000, and Snow gave more than $85,000 of his own money as well.
As he ran the
company, he also bent the ears of presidents. He served in the Ford administration,
advised President Ronald Reagan, and chaired a blue-ribbon commission on Savings and
Loan reform for President George H.W. Bush. In return, CSX and the railroad industry
won regulatory changes that allowed it to roll back safety measures, pass millions
in liability damages onto the federal government and, for at least three years, pay
zero income taxes on billions of profits.
Snow’s dual careers reached their
apex in 2003 when he was named Treasury Secretary. In that position, he was required
to scrutinize the deal involving Dubai Ports
World for possible threats to national security. Though the UAE is officially an
ally of the U.S., it nevertheless served as a way station for nuclear materials that
a Pakistani scientist sold to the regimes of Iran and North Korea in 2006. At the
time of Snow’s review of the deal, the U.S. was negotiating a free-trade deal with
the UAE.
The agreement that would have allowed the UAE company to run the
U.S. ports ultimately fell apart. Yet, until his resignation in June 2006, Snow
continued to head the board charged with screening foreign companies that were to
take over domestic firms in the homeland security field.
Snow began his
career in public policy in the 1970s at the Department of Transportation, where he
lobbied to loosen regulations on the railroad and shipping industries, and advocated
limiting the liability damages transportation companies would have to pay to
accident victims.
In 1977, he joined the company that would ultimately
become CSX, where he was in charge of “governmental affairs,” or lobbying. He rose
to CEO in 1985. Under his leadership, CSX swallowed up companies that ran railroads,
coal transportation, shipping lines and international ports. In the meantime, he
continued to shape the federal regulations that affected his industry. In 1980, he
advised Ronald Reagan on regulatory policy during his successful presidential
campaign; in 1995, House Speaker Newt Gingrich appointed Snow to a commission on tax
reform. And for several years in the 1990s, Snow led the Business Roundtable (a
private group made up exclusively of CEOs from 250 of the nation’s largest
corporations) in its successful campaign to push through the passage of the North
American Free Trade Agreement.
CSX prospered from Snow’s ability to wear
both hats – the company’s profits grew to nearly $1 billion by 1998, yet CSX managed
to avoid paying any federal corporate income taxes for at least three years,
according to Citizens for Tax Justice. In fact, between 1998 and 2001, CSX collected
rebates from the government worth a total of $164 million.
Snow was also
able to help the company avoid expenditures of another kind – paying damages to the
families of people killed in accidents caused by CSX’s negligence. After lobbying
by CSX and other companies, Congress created a legal loophole that foists CSX’s
liability damages onto Amtrak. When someone is killed because of poor or nonexistent
maintenance on tracks owned by CSX, Amtrak – the passenger train line subsidized by
the federal government – must pay the damages won in subsequent lawsuits. The New
York Times reported that the loophole has cost Amtrak more than $186 million as of
2005.
The deaths from derailments and signal failures on CSX-owned track
were becoming so frequent that in 2002, just months before Snow took over the helm
at Treasury, a federal investigator urged the government to form a special task
force to investigate CSX. The Department of Transportation has never acted upon that
recommendation.
Late in Snow’s tenure at CSX, the company began selling off
some of the assets it had acquired in the previous decade. In his last months as
CEO, the company negotiated a deal to sell its CSX Lines to the Carlyle Group (where
former President George H.W. Bush is a senior advisor and shareholder) for $300
million. CSX Lines was a shipping company; Carlyle renamed the unit Horizon Lines,
and it was awarded more than $100 million in federal contracts to run oceanographic
ships for the Navy. In 2003—less than a year later—Carlyle doubled its money when it
sold Horizon Lines to Castle Harlan LLC—a company with direct Bush family ties—for
$650 million. (President George W. Bush
once served on the board of directors of Castle Harlan.) CSX rewarded Snow with at
least $36 million in bonuses and stock options, and also forgave a $24 million loan
it had made to him earlier.
The company has a unique percentage of executives
who move back and forth between high-level posts of federal government. Soon after
Snow’s appointment, high-ranking posts throughout the federal government were laced
with former CSX lobbyists and executives, including:
- Arnold Havens, CSX’s lead in-house lobbyist who became the General Counsel of the Treasury;
- David Sanborn, who ran the CSX shipping subsidiary Sea-Land Services, Inc. and then worked for Dubai Ports, ad was nominated in 2006 to be the U.S. Maritime Administrator;
- Mike Parker, a CSX lobbyist appointed in 2001 to Assistant Secretary of the Army for Civil Works, where he advocated for a rule change to allow mining companies to dump fill waste into the streams of Appalachia. He’s once again a lobbyist, working for a client that recently won $500 million in Hurricane Katrina cleanup contracts;
- Joseph Bogosian, CSX lobbyist who in 2001 was named Deputy Assistant Secretary for the Trade Development Bureau.
- Christopher Koch, a senior vice president at CSX in charge of several shipping divisions, and who was named to the Department of Homeland Security’s National Maritime Security Advisory Committee.
John Snow Timeline
1973-74 - Deputy Undersecretary, dept. of Transportation, governmental affairs1974-75 - Deputy Assistant Secretary of DOT, Policy, Plans and International Affairs
1976-77 - Administrator, National Highway Traffic Safety Administration
1977 – Joins company that would later become CSX
1980 – Advisor to then-Governor Reagan on regulatory policy during presidential campaign
1992 - Co-Chair of the National Commission on Financial Institution Reform, Recovery and Enforcement (after S&L scandal)
1994-1996 – Chairman, Business Roundtable, lobbying for passage of NAFTA
December 2002 – Carlyle purchase of CSX Lines announced, closes in Feb. 2003
January 2003 – Nominated to be Secretary of Treasury
February 2003 – Sworn in
2004 – Dubai Ports buys CSX World Terminals for $1 billion
2005 – Dubai Ports makes bid for P&O, a company that runs six U.S. ports
January 17, 2006 – CFIUS, led by Snow, gives Ports deal a green light
June 29, 2006 – Resignation from Treasury
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