DICK DEVOS DISHONEST IN DEBATE

Monday night Bridget and I watched the first debate of the governor's race.  Both Gov. Jennifer Granholm and challenger Dick DeVos were disappointing.  When they weren't shoehorning preprogrammed talking points into their answers like the robotic political hacks they are, they let the panel of reporters bait them into slinging mud at each other.  Mind you, I'm not prissy about politics.  There's nothing wrong in principle with so-called negative campaigning or raising issues of character.  But that doesn't mean tarring your opponent can't be pointless, which most of Monday's attacks were.

However, Guv Jen did launch one attack that revealed a lack of character in Dick.  She asked him why he failed to report on his public disclosure of assets an investment in Alterra Healthcare Corp.  Alterra operated a chain of nursing homes in the U.S., including Michigan, until it collapsed into bankruptcy in 2003 amid allegations of patient abuse.  Dick retorted that Alterra was a publicly traded company in which he and his wife made an investment and had no control of it because they owned less than one percent of the company's stock.  In fact, Dick stressed the sub-one-percent figure twice.  In doing so, he characterized his investment as akin to owning some shares in GM or Microsoft or any other ordinary investment in a public company.  Befuddled by this, Guv Jen retreated.

Although Granholm's attack didn't work the way she had expected -- did she really think that DeVos somehow OK'ed the abuse of patients at Alterra nursing homes? -- DeVos's response showed us something we should know about his character.  He lied.  If not blatantly, he did so in fine Clintonian fashion, which is just as reprehensible for its deliberate slipperiness.

DeVos's characterization of his investment in Alterra was dishonest.  In 2000 Jerry Tubergen -- at the time president of RDV Corp., the DeVos family asset management firm -- was a member of Alterra's board.  He persuaded the DeVos family, including Dick and his wife Betsy, to collectively invest $173 million into Alterra to bail out the financially troubled company.  The investment purchased only a small amount of the company's stock.  Most of the investment was in the form of Alterra bonds (i.e., unsecured loans to the company) that were convertible into stock.  If the DeVos family had exercised their option to convert their bonds into stock, they would have owned 40% of Alterra's stock, including 90% of its Class A stock.  Control of that stock controls the company's board of directors.

So DeVos and his family were in fact THE major players in the financing of Alterra.  Their bonds allowed them to take that control of the company whenever they wanted, and so gave them a great deal of informal influence over Alterra if not direct control -- and that assumes none of the Alterra boardmembers other than Tubergen answered to the DeVos family.  That situation is rather different from how DeVos described it in the debate.  He and his family had rather more influence over Alterra than owning less than one percent of the stock in a publicly traded company would suggest.  While DeVos's statement about ownership of stock in Alterra was technically true, it was so incomplete as to the real stake he and his family had in the company that it was a deception.

Comments

[Steve Goulet]

Thanks for that analysis of the stock and bond transactions. I wish the mainstream media would include those kinds of details! You are right on about Dicks reaction -- he is being sneaky. He is just so polished it's scary.

Personally I find mud slinging to be a distraction. If we voters respond to these attacks we will encourage the political discourse to slant towards even more accusations and negativity. All of the best qualified candidates will stay away from politics to avoid the mud.

[The Executive Director]

Hi, Steve.

I know the Detroit Free Press ran an article yesterday with the basic facts of the DeVos investment in Alterra. So the MSM wasn't out of the loop completely.

I was surprised however that no mention was made of DeVos's mischaracterization in the debate of his investment in Alterra. Let me say I think the "gotchya" game is a silly one. Everyone misspeaks or contradicts himself on occasion, but what DeVos said was an out-and-out deception that required no special understanding of corporate financing to grasp.

As for mudslinging, I agree with you. It is one thing for Granhalm to hold DeVos accountable for his words and deeds. It's another to slander him with innuendo.

For example, the Alterra fiasco (combined with other business failures) makes the case that DeVos is not the sharp businessman he has claimed to be on the campaign trail. He has made his business acumen a qualification for governor. So his acumen is fair game.

However, when Granholm attacked him on Alterra by implying that DeVos had somehow condoned patient abuse, that was baseless charge -- hence it was mud. Even so, it did out DeVos as a man while to deceive to win the race, and character is a legitimate issue in any campaign.

Regards, Bill

[The Executive Director]

Steve (and readers generally),

I note that yesterday's Grand Rapids Press did a good job of describing the full nature of the DeVos family's investment in Alterra and how that was at odds with Dick DeVos saying at the debate that he was a passive investor.

Regards, Bill

[Piper121]

I read in the Grand Rapids Press this morning that the entire DeVos family was given a briefing about the problems within the Alterra nursing home chain. Still, DeVos will not admit that he could have been more involved but chose not to.

The article says "The elder DeVos reiterated his son's earlier statements, saying he and his family were only passive investors in the company and never had controlling interest despite investing more than $170 million in the company."

I know if I put $170 million into an investment, I would certainly be aware of the goings on. If this is how he plans to run the state, Michigan is in desperate trouble.

http://www.mlive.com/news/grpress/index.ssf?/base/news-32/1160060208187410.xml&coll=6

[Ames]

I feel that Dick DeVos is not any type of a businessman that I would trust to run anything. Keep in mind that he was the owner and President of the world's largest pyramid scheme that has ripped off millions, and has harmed more people than it has ever helped.

However, Jenny and her mole can't stay in office either.

This is not a year for the best man winning.

Too bad Ted Nugent didn't stick by his promise he made 4 years ago. Even if he is crazy, at least he doesn't lie, and make crap up. He sticks to his guns, sometimes literally.

[The Executive Director]

Piper & Ames,

You both raise an interesting point. The Alterra investment was a fiasco for DeVos. It certainly isn't evidence of a good head for finance. Of course, few businessmen never make mistakes, but what else can DeVos point to?

Windquest, his closet organizer company? It's never mentioned nowadays, but DeVos started up Windquest back in the '90s as a venture capital firm. So much for that. It now nothing more than a small humdrum company.

Amway? DeVos brags about how he turned around the company, but why was it troubled in the first place? (Like Ames says: It was a Ponzi scheme.) And how much credit does DeVos deserve for keeping the company's doors open? Amway's lenders forced outsiders onto the company's board, and the company was subsequently stripped down and converted into a big job shop for bottling the products of other companies.

Beyond his dishonesty that the Alterra matter reveals, it goes to show that the emperor has no clothes when it comes to business acumen.

Regards, Bill