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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

Public interest groups have petitioned the Treasury Department in recent years to require that every container of beer, wine or liquor carry a label disclosing the amount of alcohol in one standard serving.

The Center for Science in the Public Interest, the Marin Institute, the Consumer Federation of America and Mothers Against Drunk Driving, among others, assert that such information would help Americans drink responsibly and avoid drunk driving. The label would also contain nutrition information such as calories.

But the beer industry has argued that such labels would confuse consumers. With backing from Hensley and others, it has persuaded the Treasury Department to withdraw the alcohol content disclosure from any future label requirement.

"We strongly oppose any proposal that would back a display of alcohol content in terms of fluid ounces or pure alcohol per 'standard serving,' " wrote Andrew McCain, the senator's son. The 2005 letter was sent to the Alcohol and Tobacco Tax and Trade Bureau, a unit of the Treasury Department. Andrew McCain is chief financial officer at Hensley and owns 6.8% of the stock, according to Arizona records.

Similar letters were written by Chief Executive Robert M. Delgado and other senior executives. Hensley executives have also contributed heavily to the National Beer Wholesalers Assn., which operates the nation's seventh-largest political action committee and has argued against the label. Delgado alone has donated more than $20,000 to the group since 2004.

'High-wire act'

McCain has avoided problems in the Senate by recusing himself on alcohol issues, according to executives at the Distilled Spirits Council, the liquor industry's trade association.

"Sen. McCain has been very, very fair to this industry," said Frank Coleman, senior vice president for the council. "He stays an arm's length away from issues that benefit the family business."

While that has worked for McCain as senator, a president can not recuse himself or his administration from public policy issues as broad as alcohol, which is regulated by agencies including Treasury, the Federal Trade Commission, Health and Human Services, and Transportation.

"It is going to be a very difficult high-wire act for the McCain family," said Bruce Lee Livingston, executive director of the Marin Institute, a nonprofit alcohol industry watchdog group in San Rafael. "The big question is how much access the beer industry is going to have to the White House. You would expect the president and first lady to be concerned about alcohol abuse and alcoholism. The first lady and the president need to have a bright line between the White House and the alcohol industry."

Aside from the labeling issue, Hensley has begun distributing controversial products known as flavored malt beverages, which critics call "alcopops" because of their similarity to soda pop.

The beer industry, including Hensley, tried unsuccessfully to block liquor makers from getting into the market for the drinks.

Douglas Yonko, a Hensley vice president, wrote to the Treasury Department on that issue in 2003, asking the agency to avoid dealing "a severe blow to beer wholesalers" by blurring the line between the beer and liquor industries.

In 2006, the Treasury Department issued rules classifying the flavored drinks as beer, though up to 49% of the alcohol in them can be from distilled spirits.

The beer industry, including Hensley, responded by also moving into the market with such products as Tilt, a caffeinated alcoholic drink made by Anheuser-Busch.

Critics say the product is directed mainly at youth and can leave them wide awake without knowing they are intoxicated. Other flavored malt beverages contain sweet fruit flavors that block the taste of alcohol.

"These products are starter beverages, intended to introduce consumers to alcohol and alcohol brands," said George Hacker, director of the Alcohol Policies Project at the Center for Science in the Public Interest.

It is not clear exactly how Cindy McCain could avoid such controversy, but a range of public interest groups say she should separate herself and her husband from Hensley -- no doubt a difficult and emotional issue for any heir to a family business.

Charles A. Hurley, chief executive of Mothers Against Drunk Driving, said his organization would be watching carefully if a future McCain administration exercised influence on any alcohol issues.

"I believe she would have to put that stuff in a blind trust of some kind," Hurley said, "where she would not be involved."

Other experts, however, question whether a blind trust would go far enough to insulate a McCain administration, since the ownership would still benefit the family.

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ralph.vartabedian @latimes.com

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Times staff writer Maeve Reston contributed to this report.

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