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McCain may have conflict brewing

His wife owns a beer distributor that has engaged in lobbying.

June 22, 2008|Ralph Vartabedian | Times Staff Writer

Hensley & Co., one of the nation's major beer wholesalers, has brought the family of Cindy McCain wealth, prestige and influence in Phoenix, but it could also create conflicts for her husband, Sen. John McCain, if he is elected president in November.

Hensley, founded by Cindy McCain's late father, holds federal and state licenses to distribute beer and lobbies regulatory agencies on alcohol issues that involve public health and safety.

The company has opposed such groups as Mothers Against Drunk Driving in fighting proposed federal rules requiring alcohol content information on every package of beer, wine and liquor.

Its executives, including John McCain's son Andrew, have written at least 10 letters in recent years to the Treasury Department, have contributed tens of thousands of dollars to a beer industry political action committee, and hold a seat on the board of the politically powerful National Beer Wholesalers Assn.

Hensley has run afoul of health advocacy groups that have tried to rein in appeals to young drinkers. For example, the company distributes caffeinated alcoholic drinks that public health groups say put young and underage consumers at risk by disguising the effects of intoxication.

The involvement of McCain's family in federal regulatory issues could create a conflict of interest for a future McCain administration, according to advocacy groups and political analysts. McCain has recused himself for many years on alcohol issues in the Senate. As president, however, McCain would face far more difficulty distancing himself from an issue with such broad scope.

Cindy McCain holds the title of company chairwoman and controls about 68% of the privately held company stock with her children and the senator's son, according to records at the Arizona Department of Liquor License and Control. Cindy and John McCain keep their finances separate, and he has no stake or role in Hensley.

In an interview in May, she said she knew "everything that is going on" and communicated with her executive team every day. She added that she did not need to be at headquarters to be in charge. So far, she has given no hint of what changes, if any, she envisions. "That's very premature," she said.

If her husband is elected president and she retains her role at Hensley, she will set a precedent for outside corporate activity by a first lady.

The McCain campaign issued a statement Friday about the issue, saying that "any decisions going forward will be made when John McCain wins the election and takes office, and not before." Hensley executives declined to comment.

Political analysts said they were astounded that the presumptive Republican nominee had not already addressed the issue.

"You can't run a beer company out of the White House," said Samuel L. Popkin, a political science professor at UC San Diego. "You can't run any company from the White House. McCain is leaving a live hand grenade on the table, a major embarrassment."

Public interest groups that lobby on alcohol issues say it will clearly be inappropriate for the McCain family to continue running or owning the company if McCain is elected.

"In a lot of government agencies, there is a concern about undue influence played by a regulated industry," said Chris Waldrop, director of the Food Policy Institute at the Consumer Federation of America. "But it has not been to the point that the president's wife owns a majority share of a company that is lobbying an agency."

Public disapproval

Indeed, apart from its potential to create a conflict of interest, the mere ownership of the beer distributor could turn off some social conservatives and those who object to alcohol use.

About a third of Americans abstain from alcohol, and half either abstain or consume less than a drink a month, according to the National Institute on Alcohol Abuse and Alcoholism.

For some, abstinence -- and a disdain for the industry -- is religion-based. Leaders of the Southern Baptist Convention, which has more than 16 million members, expressed "total opposition to the manufacturing, advertising, distributing and consuming of alcoholic beverages" in the church's most recent resolution on the matter.

"I am sure for some individual Southern Baptists, [the McCain family's involvement in the beer business] would be a concern," said Roger S. Oldham, vice president of Southern Baptist Convention relations.

A close look at Hensley shows that the company has opposed changes that critics of the beer industry say were intended to help Americans drink responsibly.

Hensley's lobbying activities have put the company at the center of a battle that has raged between the beer and liquor industries since Prohibition ended. Under federal law, liquor is taxed more heavily than beer and must contain a label that discloses alcohol content by percentage or proof. Beer and wine containers have no such disclosure requirement, though alcohol content varies widely.

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