(CNSNews.com) - A prominent Democratic donor who serves as the Bush administration's manager of a $350 million development project in Africa is so far behind in raising private money for the project that he has reportedly resorted to "recycling" U.S. taxpayer funds. The situation could serve as an embarrassment for President Bush when he visits Africa early next year.
Frank Savage, the managing general partner of the federal Overseas Private Investment Corporation's (OPIC), Africa Millennium Fund, has also been at the center of corporate responsibility scandals. One critic, writing about Savage's ties to the Enron Corporation, called his record "appalling."
President Bush has been unable to get a single one of his OPIC board nominees confirmed by the U.S. Senate, leaving the agency run by Clinton appointees who chose Savage in August 2001 to manage the Africa Millennium Fund. The Bush White House did not protest Savage's selection.
Under terms of the project, designed to pay for energy, telecommunications and transportation projects in Sub-Saharan Africa, American taxpayers are to pay $227.5 million and private investors are to come up with $122.5 million for a total of $350 million.
The project "represents OPIC's largest single financing commitment to date," according to an Aug. 8, 2001 press release issued by the investment firm, Alliance Capital International, which Savage was chairing but was about to depart in order to take up the position with OPIC.
As manager of the Africa Millennium Fund, Savage was supposed to have come up with the private portion by the end of June, but failed to meet that deadline as well as an extension to the deadline at the end of September. He's now working on his second extension, which gives him until the end of the year to come up with the $122.5 million, just in time for President Bush's visit to Africa.
Private investors are being promised a 30 percent internal rate of return, which includes both income and capital appreciation, but Savage has been virtually shut out by American investors, according to a Bush administration source who spoke on the condition of anonymity.
'Some Extra Time to Raise Money'
A representative from Taylor-DeJongh, Inc., part of the consortium operating the fund but taking its lead from Savage, told CNSNews.com the failure to meet the second fund-raising deadline is "due to the worldwide financial situation and the events of September 11th." The representative declined to speak on the record.
OPIC spokesman Tim Harwood added that the second fund-raising extension granted Savage was "not unusual."
In August, Larry Spinelli, another OPIC spokesman, defended the first fundraising extension that had been granted in June. Spinelli called it "a very regular routine thing" in order to give Savage "some extra time to raise money."
But the Bush administration official told CNSNews.com in August, "The inability of Savage to raise money with a government guarantee speaks volumes for the lack of confidence that institutional investors feel toward him."
Repeated phone calls to Savage's office were not returned.
Before failing to meet the Sept. 30th deadline, Savage told Black Enterprise Magazine he was still optimistic about raising the money needed.
"I'm pleased to say that the fund is moving ahead very satisfactorily in our fundraising efforts and in the refinement of our investment strategies and policies," Savage said in September.
"We are optimistic about closing the fund in 2002, and we are looking forward to setting up operations in Africa and beginning to invest in the infrastructure sectors which we have identified," Savage added.
Savage's 'Appalling' Record
Savage's role in the Bush administration has raised eyebrows. Time Magazine, in a Jan. 14 article, called Savage "a major Democratic donor" who had given at least $100,000 to Democrats since 1999. Among the beneficiaries of Savage's contributions were presidential candidate Al Gore and New York Senators Hillary Clinton and Charles Schumer.
Howard Phillips, chairman of the Conservative Caucus, explained why he believes the administration allowed OPIC to select a Democrat like Savage to lead the Africa Millennium Fund.
"As usual, they are sucking up to people who despise them," Phillips said.
But it's Savage's past as an Enron board member that has raised the most controversy.
Journalist Joshua Green, who also edits The Washington Monthly Magazine, wrote in a June article published by the American Prospectthat "Savage's record is appalling, even by the standards of Enron board members."
Green characterized Savage as "an authentic bad apple" for his past role as a member of Enron's board of directors and for his influence over the Florida State Pension Fund, which lost $334 million while Savage was chairman of Alliance Capital, the firm that managed the pension fund.
Florida state officials sued Alliance Capital for negligence in May of this year.
Savage "serve[s] as a reminder of the need for corporate responsibility," Green wrote.
However, Savage has defended his reputation, telling the Wall Street Journal in April, that he has a "track record of integrity and honesty."
According to OPIC, the Bush administration has not had a single OPIC board nominee confirmed by the Senate. The OPIC board consists of 15 members. Eight are nominated by the president from the private sector and are subject to Senate confirmation. The president selects seven others from the public sector who do not need confirmation.
The Bush administration has so far submitted six nominations to the Senate. None has been confirmed and Clinton administration board members continue to serve until the Bush appointees are confirmed.
Harwood said the "board appointments [are] pending," but maintained that the vacancies are not affecting the agency's operations.
"It's not like the board is short staffed. The previous board members are still acting until the new ones assume their positions," Harwood explained.
The Bush administration source, familiar with the Africa Millennium Fund, confirmed that Savage has failed to raise money from American sources and has only received pledges from African sources, some of them institutions that already receive aid from U.S. taxpayers.
"All the money pledged for the fund so far has come from Africa. The only money from the U.S. is recycled money. There is no new money or U.S. private sector money, which is what the fund was originally designed for," the administration source told CNSNews.com.
"The taxpayers give these institutions foreign aid and the institutions are then recycling the money back to Savage," explained the source.
"It is very unusual for the majority of funds to be invested by foreign entities to come in here and get U.S. taxpayer guarantees," the Bush administration source said, referring to the $227.5 million coming from the U.S. government. "All of this is unprecedented," the source added.
When asked how much Savage had raised and whether the financing was coming from African sources, Harwood said he would not have an answer until the fund closes at the end of the year.
The failure of Savage to meet the fundraising deadlines is important for President Bush, who would like to use the presentation of the completed fund as a highlight of his upcoming trip.
"The administration wants the fund in place by that time. Whether it will happen remains to be seen," the administration source concluded.
See Earlier Article:
Enron Tainted Democrat Contributor Has Big Role in Bush Administration
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