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Friday, January 20, 2006

Bribery or Business as Usual?

Cerberus Capital Management has gotten a lot of favorable press as one of the darlings of the hedge fund boom.  (See, e.g., this Business Week article, reporting that Cerberus may have "perfected a new business model".)  Now, however, it's gotten some publicity of the unfavorable kind, as a USA Today article highlights an unseemly connection between Cerberus and Congressman Jerry Lewis (R-Cal.).  According to the story, in July 2003 Lewis voted in support of a $160 million defense contract to MCI a day after Cerberus held an event raising $110,000 for the congressman's political action committee.  At the time, Cerberus owned a $140 million chunk of MCI, and a Cerberus representative sat on the MCI board.

Although the donation's timing is unseemly, the article does not mention any ongoing investigation of the matter.  But once again we see the fine line between a bribe and a donation to someone who agrees with you.  Our political system depends on that line, but that doesn't make it pretty.

Posted by Matt Bodie on January 20, 2006 at 12:53 AM in Corporate | Permalink

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