Chamber’s Donohue Keeps Cash Coming After PG&E, Apple Defect

Nov. 12 (Bloomberg) -- Apple Inc. and three other members of the U.S. Chamber of Commerce quit over its opposition to climate-change legislation. President Barack Obama denounced the group for “spending millions” to kill a planned consumer financial-protection agency.

Tom Donohue, the 71-year-old president of the nation’s largest business-lobbying organization, responded by doing what critics and admirers alike say he does best: using a fight to raise money in support of the Chamber’s agenda.

“He’s never better than when he is scrapping against somebody,” said Lana Batts, who was the chief lobbyist at the American Trucking Associations, where Donohue was president from 1984 to 1997. “If I were a major business owner, Tom Donohue is the guy I would want to be leading the charge.”

After the criticism over the climate bill, Donohue simultaneously mounted a public relations blitz and bashed detractors. He invited reporters in to hash over the issue and hosted Chamber talks with Obama Chief of Staff Rahm Emanuel, U.S. Trade Representative Ron Kirk and economic adviser Larry Summers.

He also told a Wall Street Journal columnist that critics expecting him to back off should “put their damn helmets on,” and deployed the Washington-based group’s Web site to rally the troops. “Help Stop Attacks on the U.S. Chamber,” the site says. “Liberal left wing extremist groups and their leftist allies continue their attacks. Don’t let them muzzle us.”

The solution proposed by the organization, whose 300,000 members include Wal-Mart Stores Inc., Caterpillar Inc., Pfizer Inc. and Lockheed Martin Corp.: Send money.

Battling the Enemy

It worked, according to a Chamber official who declined to be identified discussing internal fundraising. While the four companies that quit paid annual dues totaling $150,000, the Chamber used the uproar to recruit six new members paying a combined $750,000 a year, and to generate more than $100,000 in donations, the official said.

Waging such battles is what Chamber members expect, and why they pay dues, Donohue says.

“Companies find it a little dangerous to get too far out ahead of what Congress and others are doing,” he said in an interview. “They look to us.”

He’s “such a bulldog,” said Joan Claybrook, a consumer advocate and Donohue critic who opposed him on truck-safety rules. “Once he makes up his mind that someone is the enemy, he can’t adjust to the idea that the best way to win things is by persuasion, rather than to do battle.”

“I’m not a hard guy,” Donohue said in the interview last month as the climate dispute intensified. “I’m an Irishman. I’m the easiest guy to get along with in this city.”

Biggest Lobbyist

Donohue, who was paid $3.2 million by the Chamber in 2007, the most recent year on record, said he has built the group’s annual budget to $200 million today from $40 million when he took over in 1997 after leaving the trucking association.

The Chamber is the biggest spender among Washington lobbyists, shelling out $65 million in the first nine months of this year, according to the nonpartisan Center for Responsive Politics. That’s more than the combined total of the next three biggest spenders, Exxon Mobil Corp., the Pharmaceutical Research and Manufactures of America and General Electric Co., which each spent about $20 million.

The Chamber, which employed two full-time lobbyists when Donohue arrived, now has 92 registered lobbyists on its staff and uses 21 outside lobbying firms.

“Donohue has done a masterful job at raising his profile, and raising money,” Sheila Krumholz, executive director of the Washington-based Center for Responsive Politics, said in an interview. “He is cited year after year as the top lobbyist in Washington.”

‘Extreme Rhetoric’

The climate-change issue erupted when PG&E Corp., parent of California’s largest utility, quit the Chamber for opposing legislation sought by Obama and passed by the House. Apple, Exelon Corp., owner of the largest number of U.S. nuclear power plants, and PNM Resources Inc., New Mexico’s biggest utility company, also said they were quitting.

Executives from the departing companies cited comments such as one from Chamber executive William Kovacs. He told the Los Angeles Times the Environmental Protection Agency’s plan to regulate greenhouse-gas emissions should be subject to an inquiry comparable to the Scopes trial on evolution.

“Extreme rhetoric and obstructionist tactics seem to increasingly mark the Chamber’s public stance on this issue,” Peter Darbee, PG&E’s chief executive officer, wrote in a letter to Donohue.

“We have 300,000 members, and we’ve lost four,” Donohue said in a Bloomberg TV interview Oct. 13. In remarks prepared for a separate meeting with reporters, he blamed the defections on “an orchestrated pressure campaign by a couple of environmental groups.”

Funding Sources

The Chamber doesn’t disclose its funding sources. According to company Web sites, Dow Chemical Co., a backer of climate- change legislation, paid the Chamber at least $1.6 million in 2008; Chevron Corp., $250,000; Intel Corp., $286,583; and Prudential Financial Inc., $1.65 million.

Donohue had limited experience in private industry before becoming one of its most-outspoken advocates. A native of Brooklyn, New York, he graduated from St. John’s University in New York City and earned a graduate degree in business from Adelphi University in Garden City, New York. His jobs included a stint at the U.S. Postal Service as a labor negotiator. He joined the Chamber in 1976 as a vice president before leaving for the trucking group.

“He was the same as he is now,” said Paul Klaassen, who went to work at the Chamber in the late 1970s while a student at Georgetown University. “He was intense, a workaholic.”

Sunrise Senior Living

Klaassen was a speechwriter and driver for Donohue, and describes the Chamber executive as a mentor. Later, Klaassen and his wife started Sunrise Senior Living Inc., an operator of senior-citizen homes based in McLean, Virginia. In 1985, when Sunrise was trying to build its first facility, Donohue and his wife Liz invested $300,000 of the $400,000 needed, Klaassen said.

“I only found out years later that they took a second mortgage out on their home,” Klaassen said in an interview.

Donohue’s finances have strengthened along with the Chamber’s. His 2007 compensation made him the third-highest-paid association head, according to a ranking by National Journal.

He joined Sunrise’s board before the company went public in 1996, and remains on it today, earning $155,000 for his service last year, according to a regulatory filing.

In November 2005, Donohue exercised Sunrise stock options for a profit of $2.5 million, he reported in a filing with the Securities and Exchange Commission. He sold the shares for $33.03 a share. Sunrise fell 7 cents, or 2.6 percent, to $2.59 yesterday in New York Stock Exchange composite trading.

‘Proud of His Work’

“Tom is proud of his work with Sunrise Senior Living, where they fundamentally changed the way seniors are treated in America and other places around the world,” Chamber spokeswoman Tita Freeman said.

Klaassen said he sold Donohue a waterfront vacation home next to his own on Maryland’s Eastern Shore in 1998. Purchased for $440,000, Donohue’s retreat is now worth $1.56 million, according to a county assessment.

Donohue also was paid $236,125 last year for serving on the board of Union Pacific Corp., the second-largest U.S. railroad by revenue. He had options to buy 39,000 Union Pacific shares, according to a filing earlier this year. The options would be valued at $2.5 million based on yesterday’s closing price. Both Sunrise and Union Pacific are Chamber members.

Donohue, who last month vowed to spend “tens of millions” of dollars a year on a new Chamber campaign to promote free enterprise, says he has no plans to slow down.

“I’m just a symbol for people who can work later in life than you normally do,” he said.

To contact the reporters on this story: Mark Drajem in Washington at mdrajem@bloomberg.net; Daniel Whitten in Washington at dwhitten2@bloomberg.net.

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net.