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. **"

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

The Cable

Rand Paul ‘open-minded’ on Hagel

Sen. Rand Paul (R-KY), one of the new Republicans on the Senate Foreign Relations Committee, has no plans to oppose the nominations either of former Sen. Chuck Hagel to be the next defense secretary or current Sen. John Kerry (D-MA) to be the next secretary of state, he told The Cable in an interview.

"I'm going to remain open-minded and hear more about what [Hagel's] plans are and his direction are as he comes forward. I'm not going to make a prior commitment one way or the other," Paul said.

The firm opposition to Hagel has now risen to include five GOP senators. Sen. David Vitter (R-LA) announced he would vote "no" on the nomination, adding him to the list that includes Sens. John Cornyn (R-TX), Dan Coats (R-IN), Tom Coburn (R-OK), and freshman Sen. Ted Cruz (R-TX). Other top senators who have expressed reservations but not committed to a "no" vote include Sens. John McCain (R-AZ), Lindsey Graham (R-SC), and new ranking Republican on the Senate Armed Services Committee James Inhofe (R-OK).

Paul said he intends to use Hagel's nomination to press the former Nebraska senator on whether he would support the reform of how the United States doles out arms and military aid to foreign countries, especially those that don't follow policies that are in the American national security interest.

"It's an opportunity to talk about the issue and get his opinion about our aid to foreign countries. I would like to ask and will ask [him] whether or not they are aware of the world we live in. Everybody seems to be aware of it, but nobody is changing policy," Paul said.

Paul isn't on the Armed Services Committee, which will vet Hagel, but he is on the SFRC, which will vet Kerry. Paul intends to use Kerry's hearing to press for answers on Benghazi, but he said Kerry's nomination shouldn't be considered until Secretary of State Hillary Clinton testifies before the committee first.

"One of my questions will be: If the buck stops with her, is she taking ultimately responsible for the failure?" he said. "I'd like to know whether she read the cables from Ambassador Stevens... The real point is who was in charge of the security and in the months leading up to the attack, why wasn't there adequate security."

Paul has been active in pushing his idea for cutting foreign aid to the countries of Egypt, Libya, and Pakistan until or unless those countries take steps to cooperate with U.S. foreign policy objectives. Sometimes, Paul has used tactics like holding nominees or objecting the easy passage of bills to get a hearing on his foreign aid amendment.

Those tactics are likely to continue, Paul said, but that's his prerogative as a senator and he doesn't feel guilty about using that power from time to time.

"While people complain about the Senate, in the end we've never held anybody who wasn't released as a nominee eventually," he said.

Paul plans to use his new perch to argue for a scaled-back American role in the world and a reform of American foreign assistance funding.

"There needs to be a voice for people in the country who want to see a less aggressive foreign policy, a more defensive foreign policy, and a less interventionalist foreign policy," he said. "The president says over and over again that we need to do nation building at home, not overseas, but he continues to do both. I think we need to put teeth to the fact that we are running out of money."

Paul will also continue work to ensure that any resolutions or sanctions measures for Iran include language making clear that Congress has not authorized the use of military force there.

"I'm not about to let any war happen without a significant and serious debate in Congress. I wish the president was more like he was a senator when he said no president should go to war without the consent of Congress. Now that's he's president, he's totally forgotten that," he said.

There are some rumors that Paul might be given a ranking Republican position on one of the SFRC subcommittees, which would give him more staff and the ability to work on more issues. He said hasn't been offered such a post but would take it if offered.

There could also be fireworks between him and McCain, who also just joined the SFRC and who opposes Paul on almost every foreign-policy issue.

"You'll just have to wait and see on that," Paul said with a laugh.