Forbes's $25 Million Question

Exactly how is the former candidate paying his bills? No one knows

Where did Steve Forbes get the $25 million he lent to his failed Republican Presidential primary campaign? And exactly how much is he worth, anyway? We may never know.

Forbes seems to prefer it that way. By closing down his failed campaign quickly, he may avoid further public scrutiny of his holdings. Forbes has decided not to carry the personal loan on his campaign books as a liability to himself. Instead, he intends to convert the loan to a megadonation, canceling 15 planned fund-raisers and forgoing any hope of recouping some of the loss, his campaign says. That would allow Forbes to balance the books, dismantle the campaign accounting machinery, and avoid filing any more Federal Election Commission reports.

As an active campaigner, Forbes would be facing even more exposure. By May 15, he would be required to report to the Office of Government Ethics the value of all his assets. The report also might have revealed any asset sales made to raise campaign cash. By dropping out, Forbes won't have to file the ethics report.

RAIDING THE EGG. Forbes, editor-in-chief of a magazine that delights in detailing the wealth of people with even less money than himself, won't discuss his net worth or the value of Forbes Inc., which he controls with 51% of the voting stock. Forbes's vast wealth is almost entirely locked up in the stock of the company founded by his grandfather. Rival Fortune estimates the company's worth at $1.16 billion and Steve Forbes's 35% share at $406 million.

Other sources indicate that Forbes couldn't have raised the $25 million for the campaign without touching the family nest egg. A September, 1995, campaign disclosure filing puts Forbes's ownership of publicly traded stocks and bonds in a range of $2 million to $6 million. His 520-acre estate in Bedminster, N.J., and two other real estate holdings are each valued at "over $1 million," the highest reporting category on the disclosure form. Fortune estimates the total value of his real estate holdings at $26 million, but the report also shows that the properties carry mortgages of at least $1 million.

So unless Forbes had $25 million in cash to lend his campaign, he was probably left with three options: mortgaging the family farm to the hilt, borrowing from a bank using Forbes Inc. stock as collateral, or selling Forbes Inc. stock to one of his four siblings. Any loan--including one from a family member or a friend--would be subject to the same $1,000 FEC limit governing contributions. Only a financial institution could have lent Forbes the $25 million, but only then with adequate collateral. The loan amount would have to appear on Forbes's monthly FEC report. Sale of the stock to a sibling wouldn't need to be reported.

Most political experts agree that Forbes probably couldn't recoup his out-of-pocket cash even if he had tried. "Forbes would simply not be able to raise that kind of money now that he has dropped out," says Joshua Goldstein of the Center for Responsive Politics, a campaign-finance watchdog.

Forbes's campaign manager, William Dal Col, says that so far the former candidate hasn't told even him where the $25 million came from for the balloons, TV ads, bumper stickers, and the campaign bus. Unless Steve Forbes decides to tell, no one else will likely ever know.

Before it's here, it's on the Bloomberg Terminal.