Nearly two months after Lamar Alexander was first nominated, the Senate last week unanimously confirmed the former Tennessee Governor as the next Secretary of Education.
Before the voice vote, and in an earlier discussion by the Labor and Human Resources Committee, some Democratic senators tempered acclaim for Mr. Alexander’s education record with criticism of his financial practices. They indicated they were still concerned about the propriety of several lucrative transactions in which he engaged during and after his two terms as Governor.
“I believe Lamar Alexander has the qualifications, experience, and ability to be a truly excellent Secretary of Education,” Senator Claiborne Pell, Democrat of Rhode Island, told the panel Wednesday.
“I also believe he repeatedly exercised poor judgment and taste in his investment practices,” said Mr. Pell, chairman of the panel’s education subcommittee. “However, I believe that the balance lies in his favor.”
Other senators said they had come to a similar conclusion about Mr. Alexander, who is currently president of the University of Tennessee.
Senator Tom Harkin was not convinced, and the Iowa Democrat abstained from the committee vote.
“We’re talking about uncashed checks, shifting money into his wife’s name, an unsecured, prime-rate loan,” said Mr. Harkin, who will help set the Education Department’s budget as chairman of a key appropriations subcommittee. “Quite frankly, the whole thing sounds like someone who paid a lot of attention while in public service to making money.”
Aides to Senator Edward M. Kennedy, the Massachusetts Democrat who is chairman of the committee, spent a month investigating Mr. Alexander’s finances, particularly his investments. (See Education Week, March 13, 1991.)
The probe was kept confidential, with the results revealed to panel members shortly before the vote.
A summary released by Mr. Kennedy last week said the committee was particularly interested in Mr. Alexander’s transactions involving:
The Knoxville Journal. In 1981, Mr. Alexander was part of a group--which also included former Senator Howard Baker, once Mr. Alexander’s employer--that arranged the sale of the newspaper to Gannett Communications Inc.
The investors, who put up no money of their own, received Gannett stock, which ultimately netted Mr. Alexander $620,000.
Corrections Corporation of America. As Governor, Mr. Alexander backed privatizing the management of Tennessee prisons at a time when his wife, Honey, owned stock in the firm, which ultimately won a contract from the state.
She received a $140,000 profit from a $5,500 stake.
Blackberry Farm. Mr. Alexander relinquished his interest in the conference center when he became Governor, but repurchased shares when he left office.
When he became president of U.T., he transferred his ownership to Ms. Alexander, and the university subsequently did $60,000 worth of business with the center.
Whittle Communications. In 1987, Mr. Alexander received a $125,000 consulting fee for helping the firm establish a regional magazine, and also obtained the right to purchase Whittle stock. His first check was never cashed.
After Mr. Alexander became president of U.T., Ms. Alexander bought the stock for $10,000 and sold it two months later for a $320,000 profit.
While the probe found “no persuasive evidence of violation of law,” Mr. Kennedy said, these transactions created “the appearance of a conflict of interest and the appearance of using his high public office for the private financial benefit of himself and his family.”
Committee members also discussed an unsecured, low-rate loan Mr. Alexander received from a bank that did business with U.T., and $150,000 he received from a Nashville business college.
“That job appears to have been created for him, as no one held the position before or after him,” said Senator Howard M. Metzenbaum, the Ohio Democrat who brought up the financial issue at Mr. Alexander’s confirmation hearing and apparently pushed for the probe.
Senator Orrin G. Hatch of Utah, ranking Republican on the committee, reiterated his criticism of the lengthy investigation, which he had previously charged was politically motivated. But other Republicans said they thought it was justified.
“I think the issues raised by the facts, examined in the light of 1991, needed to be examined and appropriate conclusions drawn,” said Senator Dave Durenberger of Minnesota, who was himself the target of an ethics probe focused on financial issues.
In a statement, Mr. Alexander thanked the senators for their support and promised to be “a sparkplug for change.”
“The talk about my financial successes has been flattering but, I am afraid, exaggerated,” Mr. Alexander added. “I have made some good investments, which for a potential Cabinet member, I hope is better than making bad ones.”
