The Cable

Horse-racing gambler funding pro-Hagel campaign

The new and expensive campaign to defend defense secretary nominee Chuck Hagel is being funded, at least partially, by a Democratic money man who made his fortune betting on horses and who has connections to the liberal pro-Israel group J-Street.

The fight over the Hagel's nomination to replace Leon Panetta atop the Pentagon has been well underway ever since The Cable first reported in November that Hagel was being vetted by the White House. But without White House assistance before Monday's official nomination and without a staff of his own, Hagel was ill-equipped to fight the onslaught of negative publicity coming from his many critics, and his critics were able to set the initial frame and tone of the coming confirmation debate.

But over the last two weeks, Hagel's friends in the Democratic political world have come to his aid, principally by rounding up senior former officials to write supportive op-eds and funding an advertising effort to spread the world that Hagel does in fact have bipartisan support.

The Cable has learned that a large chunk of that pro-Hagel money is coming from one Democratic donor, gambling legend Bill Benter, who is working with the Podesta Group, a Washington lobbying firm, to support pro-Hagel advertising. Podesta facilitated Benter's funding of a week of ads in Politico's Playbook must-read daily newsletter, written by Mike Allen, a spokesman for Benter confirmed to The Cable.

"The Bipartisan Group issued its letter to set the record straight on Chuck Hagel's character and on the positions taken by that Group.  One of the Group's long-time supporters, Bill Benter, paid for the advertising so that the letter could reach a wider audience," the spokesman said. "The public interest would be better served if those organizations which spent much more on attack ads against Senator Hagel would also disclose their donors."

Here's what the Playbook message said:

"**A message from The Bipartisan Group: The Bipartisan Group recently wrote President Obama to express strong support for Senator Hagel, reportedly under consideration for nomination as Secretary of Defense. Our polarized life needs leaders with the kind of independence of conscience and mind Chuck Hagel's service to our country has exemplified. http://bit.ly/TnWWLB **"

FP's Situation Report, which first revealed Podesta's involvement in the pro-Hagel effort last week, reported that the Politico ad buy cost about $35,000 and that Bipartisan Group paid for it.

The Bipartisan Group is a loose conglomeration of foreign policy heavy weights that have joined together on certain occasions to weigh in on national security issues.

"The Bipartisan Group is an informal grouping of leading foreign policy experts, most of them former senior government officials, who are connected with various leading policy institutes and academic institutions, such as the Atlantic Council, the Council on Foreign Relations, the Aspen Institute, and the U.S./Middle East Project," a representative of the group told The Cable.

The group organized its first letter in 2008 and its members include Zbigniew Brzezinski, Thomas Pickering, Lee Hamilton, Brent Scowcroft, Paul Volcker, Frank Carlucci, William Fallon, Sandra Day O'Connor, and ... Chuck Hagel.

"It was a group that got together (for these kinds of things) and called themselves the Bipartisan Group," said Larry Korb, defense expert at the Center for American Progress.

Benter has been involved in funding various Democratic political and policy efforts over the years. Sources told The Cable his money has contributed to organizations including the the Center for a New American Security, the New America Foundation, the Democracy Alliance, and the pro-Obama Super PAC Priorities USA. Benter has also contributed to projects at the Center of American Progress, run until recently by Clinton White House Chief of Staff John Podesta, who led President Barack Obama's transition team and who works part time at the State Department.

The Podesta Group is a lobbying and public relations firm run by John's brother Tony Podesta. Their client list includes several major defense contractors, although those contractors are not directly funding the pro-Hagel campaign, despite some reports to the contrary.

Benter made his fortune by becoming what Wired magazine called "the most successful sports bettor in the world." He devised a system in Hong Kong that uses computer models to place bets on horse races and then masks those bets by funneling the money through proxy betting accounts.

Benter was most recently in the news because he admitted to being a business associate of one Consolacion Ediscul of Happy Valley, a Hong Kong suburb. As Ben Smith wrote in Politico and Eli Lake wrote in the Washington Times, Ediscul was discovered to be the largest single funder of J-Street, the liberal pro-Israel group that is backing Hagel in the face of attacks from other parts of the pro-Israel community.

Ediscul contributed $811,697 to J-Street in 2008-9, according to the group's 990 forms, about half of the money the group raised that year. A Filipino resident of Hong Kong, she was not known to be involved in pro-Israel politics and the money is widely assumed to have come from Benter. Benter has never confirmed nor denied this allegation.

Steve Clemons, a long-time supporter of Hagel's, said there's nothing wrong with Benter's activity and pointed out that the anti-Hagel crowd is superbly well funded by undisclosed rich donors.

"Sheldon Adelson and Irving Moscowitz are regulars at this and I think it is great that progressive funders step forward to support a fair and honest discourse on these issues," he said. "There's been too little funding put behind candidates like Hagel and too much funding spent on the smears. It's nice to see some balance."

The anti-Hagel machine has been funding ads through a range of organizations. They include the Emergency Committee for Israel, which counts Weekly Standard Editor Bill Kristol as one of its board directors, and the Log Cabin Republicans, who took out a full page ad criticizing Hagel's record on gay rights Monday in the Washington Post.

Heather Hurlburt, executive director of the Democratic leaning National Security Network, said that both sides will ramp up their spending on the Hagel nomination now that he has been named officially. The amount of cash flowing into both sides is a problem, she said, but not one either side seems anxious to solve.

"How is this different from how everything in Washington gets funded?" she said. "There's a transparency question, but every day somebody is pushing something into the media and somebody has to pay for it."

Mark Wilson/Getty Images

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