Harkin Scandal

December 19th, 2012

Korean ammo manufacturer and polluter gives Harkin Institute 500,000 dollar coins

CEDAR RAPIDS, Iowa—Money can’t buy you love, but $500,000 might buy you Iowa’s junior senator. Just make sure the kickback is in dollar coins, not greenbacks.

That’s the implication of an investigative report by the Associated Press examining Sen. Tom Harkin’s close relationship with Poongsan Corp., which donated $500,000 to an institute at Iowa State University honoring the Iowa Democrat. The Korean firm operates a Cedar Rapids division that has received more than $1.5 billion in federal contracts since 2000—partly thanks to Harkin’s lobbying.

Jin Ryu

Poongsan Corp. and PMX Industries CEO Jin Ryu

TheIowaRepublican.com has previously highlighted the $250,000 donation by PMX Industries, Inc., the Iowa subsidiary of Seoul-based Poongsan, and a matching $250,000 contribution by the firms’ CEO Jin Roy Ryu, a 54-year-old citizen of South Korea. If Harkin succeeds in his mission to eradicate the dollar bill and replace it with coins, PMX and Poongsan will reap the windfall from the U.S. Treasury.

Harkin’s bill would force Americans to switch to dollar coins, mandating the Federal Reserve to stop circulating $1 bills in as little as four years. According to the Government Accountability Office, the auditing arm of Congress, the bill would save the U.S. government $4.4 billion over 30 years.

“Promoting the dollar coin is a smart investment for our country that saves taxpayers’ money,” Harkin said in a January press release promoting his COINS Act.  “With the deficit looming, we need only look at the cost-savings from this effort to understand why this legislation is so urgently needed.”

But Harkin’s so-called cost-savings don’t come from cutting government costs. The “savings” come from fleecing taxpayers (economists estimate that one out of every three dollar coins sits unused in Americans closets, coin jars and couch cushions). When factoring out the government profit known as seigniorage—it costs the U.S. Mint 30 cents to produce the coin, switching to the dollar coin would actually cost taxpayers $3.4 billion over three decades, according to a Federal Reserve analysis of the GAO’s figures.

OMB Watch graphic

Federal payments to Poongsan Corp. and PMX Industries.

Poongsan’s federal contracts surged as high as $308 million per year (see graphic at left from OMB Watch, a federal spending watchdog) after Harkin led the effort to mandate production of dollar coins in 2005 (when the company’s received $140 million from Uncle Sam). Last year, National Public Radio reported that more than $1.2 billion in dollar coins sit idle, earning no interest, in Federal Reserve vaults due to lack of demand by banks and consumers.

The coins have “no perceivable benefit to the taxpayer,” the Federal Reserve told Congress. “We have no reason to expect demand to improve. We also note that a 2008 Harris poll found that more than three fourths of people questioned continue to prefer the $1 note.”

The Obama administration finally killed the $1 presidential coin series last year. No less an authority than Vice President Joe Biden deemed it an example of wasteful government spending.

“Given the substantial, growing inventory of $1 coins, it is clear that the minting of hundreds of millions of additional $1 coins over the next several years is not necessary and is not an effective use of taxpayer dollars,” Deputy Treasury Secretary Neal S. Wolin, an appointee of President Obama, said.

Harkin remains unswayed in his support for forcing Americans to use coins.

Poongsan is the largest donor to the Harkin Institute of Public Policy, which was rushed through the state Board of Regents in April 2011 amid political controversy. Last week, TheIowaRepublican.com asked PMX Industries a series of questions about the donations. PMX Vice President Jim Richardson declined to respond to our email or phone inquiries.

Richardson told the AP that the company was solicited by the ISU’s fundraising foundation, but the foundation official in charge last year declined to comment on his role in the controversial cash transfer. Former ISU Foundation president Daniel P. Saftig was forced to resign in March after ISU president Steven Leath sought to replace him. Saftig is now a vice president at Grenzebach Giler and Associates, a Chicago-based philanthropic management firm.

Saftig attended a meeting with Sen. Tom Harkin, Ruth Harkin, Harkin’s chief of staff Brian Ahlberg, California lawyer Chuck Manatt and former ISU President Gregory Geoffroy to discuss Harkin’s namesake project in the Senate dining room in June 2010. Sometime between then and September 2011, one of those people just happened to ask a prime beneficiary of Harkin’s legislative largesse for $500,000. University officials refused to explain why the company was solicited, the AP reported.

Ryu and his wife gave $125,000 to the Harkin Institute in September 2011 along with PMX. The couple and PMX then each transferred another $125,000 in October. Between the donations, Harkin announced his COINS Act and toured the company, which is located in an industrial park in Cedar Rapids’ southwest quadrant. PMX told the AP that its donation was “good-natured gesture to support education.”

Campaign finance laws and Senate ethics rules prohibit companies that lobby Congress from contributing to charitable funds “maintained or controlled” by sitting senators or their relatives (Harkin’s wife Ruth considers herself a member of the institute’s advisory board and one of his Des Moines-based staffers also attends meetings). As a foreign national, Ryu is not allowed to donate directly to the campaign of Sen. Harkin, who faces a re-election campaign in 2014. Corporate contributions to candidates are also illegal.

Harkin and former ISU fundraiser refuse to comment

TheIowaRepublican.com asked Harkin Thursday whether he has solicited contributions for his namesake institute from corporate donors. He refused to answer.

“As I said, I made my statement last week, and that’s all I will say at this time,” he said, after laughing at the question.

A reporter for TheIowaRepublican.com reached Saftig’s wife Tuesday at home in Ames. He could be heard telling his wife that he did not want to speak to a reporter. His wife simply stated that Saftig “cannot come to the phone.”

Harkin supporters have rushed to criticize regents Craig Lang, the former head of the Iowa Farm Bureau, and Bruce Rastetter, an agricultural entrepreneur, for allegedly exercising their influence as regents members to restrict ag research at the Harkin Institute. However, as TheIowaRepublican has detailed, ISU faculty view the Harkins’ concerns as little more than political posturing.

Nonetheless, former regent and Harkin Institute donor Michael Gartner and Hugh Espey of Iowa Citizens of Community Improvement have published screeds in the Des Moines Register’s opinion pages claiming—with no evidence—that Lang and Rastetter are operating a nefarious conspiracy for corporate agriculture interests to squelch academic freedom.

Meanwhile, these same individuals refuse to address legitimate concerns about a foreign conglomerate donating $500,000 to a supposedly nonpartisan academic unit controlled by Harkin’s wife and political allies. Referring to Lang and Rastetter, Espey wrote that “[t]hese are the same big-moneyed agribusiness interests that have polluted Iowa’s air and water quality and done a lot of damage to the independent family farm.”

Liberal hypocrisy by Harkin Institute backers?

Environment Iowa, a liberal-leaning advocacy group, recently singled out PMX Industries as one of the most notorious corporate polluters in Iowa. For example, in 2009 the company was ranked 5th in releases of cancer-causing chemicals (it dumped 322 pounds of such chemicals in Willow Creek). It was also ranked 6th in releases of developmental toxicants (215 pounds) and 4th in releases of reproductive toxicants (215 pounds).

In 2011, the latest year statistics are available from the U.S. Environmental Protection Agency, PMX released 148,363 pounds of copper compounds, 134,987 pounds of zinc compounds and 222 pounds of lead compounds into the environment. According to the EPA’s Toxics Release Inventory database, PMX released 294,662 pounds of chemicals into Iowa’s environment in 2011.

Nonetheless, Harkin says he “will continue to support efforts to safeguard the quality of our water and air,” according to the “Issues” page on his U.S. Senate website.

Supporters of so-called academic freedom at the Harkin Institute from corporate interests have also remained silent on Poongsan’s booming business in providing ammunition to militaries and private citizens.

.223 caliber bullets for an AR-15 rifle sold by PMC, a subsidiary of Poongsan Corp.

The slogan of Poongsan’s ammunition division, Precision Made Cartridges (PMC), is “Creating a legend… one shooter at a time.” The slogan took on a gruesome meaning last week as national debate has now focused on gun control as well as access to bulk caches of ammunition.

The .223 caliber Bushmaster semi-automatic rifle has been used in several mass killings in the United States, including the Connecticut school shooting Friday where 27 people, including 20 children, lost their lives.

PMC produces one of the most popular brands of ammunition for the AR-15-type gun. A bulk order of 1,000 .223 caliber PMC rounds can be purchased online for as little as $413—41 cents per bullet. Poongsan markets the bullets as a way for shooters to “enjoy high volume shooting without emptying their wallets.”

“It is time to address increasing gun violence in this country,” Harkin said in a statement Friday. “We need to ask whether people need unlimited access to any arms, including those capable of shooting hundreds of bullets in a very short time.”

He might want to start by asking ISU to return the $500,000 donation to PMX and Poongsan.

About the Author

Jeff Patch
Jeff Patch is a correspondent for TheIowaRepublican.com. He's a communications, research and political consultant for Iowa candidates, causes and companies. E-mail questions, comments, insults or story ideas to jeff [at] theiowarepublican.com.

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