In 1992, Bond's inherited wealth was virtually wiped out when a blind trust that had two years earlier been valued at $1.3 million -- and that Bond had used as collateral for large loans -- was sold by creditors to cover his debts. He was forced to sell his splendid $1.25 million Washington home of five bedrooms, four fireplaces and servants' quarters and move into a modest rental five blocks away. "The senator had hit lean times," the St. Louis Post-Dispatch reported in 1993.

Bond claimed the trust had been drained dry by the malicious incompetence of his fund manager at PaineWebber, William Reik, and sued him for $11 million. The suit stated that Bond's brother, Arthur Bond Jr., had checked on the investments in the trust in October 1989 and instructed Reik to diversify the holdings. Of course, legally a trustee of a blind trust cannot be influenced by the investor, even in the proxy form of a brother, a fact that Reik and PaineWebber noted in the case. In the end, the parties settled out of court; Bond received $900,000.

Many politicians use blind trusts to avoid the conflicts of interest inherent in having a stake in companies affected by their actions in government. Indeed, Bond had used them since his first gubernatorial run. But in the wake of his financial collapse, he soured on the idea. In 1995 he told the Post-Dispatch that putting finances in a blind trust was "stupid."

Bond restored his solvency partly by investing in Missouri companies whose interests he has advanced before the Senate. Bond's pattern of conflicts of interest runs back to 1993, when he bought McDonnell Douglas stock for his son while acting as the "heavy hitter" for the firm's interests in the Senate, as the Post-Dispatch put it. Bond brushed off questions about the propriety of the purchase as "ludicrous."

In February 1997, Bond bought between $15,001 and $50,000 worth of shares in Kansas City Southern, according to the financial disclosure forms he filed with the U.S. Senate. That same day, he purchased between $1,001 and $15,000 worth of stock for his dependent son, Sam. (Precise numbers are hard to come by, as government rules only require disclosure in broad categories.)

Two months before Bond decided to invest in the railroad company, it had hired Warren Erdman, the senator's longtime chief of staff, who joined as vice president and chief lobbyist. Erdman still holds this position, according to records filed with the House and Senate, which also reveal that KCS spent $220,000 on his lobbying activities in the first six months of 2004. Erdman also happens to be the campaign chairman for Bush-Cheney '04 in Missouri, Kansas, Oklahoma and Arkansas.

One of Erdman's first tasks in his lobbying job was to win Senate approval for Kansas City Southern's attempt to turn the defunct Richards-Gebaur Air Force Base into a major rail hub. The base was shut down after the 1994 round of base closings and was losing money as a general airfield. Kansas City leaders approached the company -- which had just acquired a Mexican rail line -- to see whether it was interested in acquiring the property and making it an "inland gateway to Mexico," in order to take advantage of the newly enacted North American Free Trade Agreement.

Bond quickly swung into action. In July 1997 -- five months after he had bought the railroad company's stock -- he inserted into a Senate bill a $500,000 grant for the Kansas City Chamber of Commerce to study the proposal. Closing the airport required formal approval by the Federal Aviation Administration, and Bond tried to circumvent the process by slipping a provision into an October 1997 spending bill to simply shut the airport down. The measure was removed by a House-Senate conference committee, forcing Bond and KCS to take the long route through the federal bureaucracy. Bond then arranged for city officials to meet with then Transportation Secretary Rodney Slater and personally pushed the project with the FAA and other federal bodies.

Critics, including some local officials, argued that the proposed rail hub was a bad deal: It would increase the number of trains and trucks rolling through the area, it would shut down a local airstrip used by small aviators and, as a member of the Kansas City Star's editorial board wrote, it was "a sweetheart financial deal for the railway" arranged "with too little scrutiny."

Apparently agreeing with that assessment, when the FAA decided to close the base in December 1998, it stipulated that Kansas City Southern would have to pay $15 million more in rent than originally thought -- $74 million instead of $59 million -- over the course of its 50-year lease.

Recent Stories