Profile Result

John Snow
Last Updated: October 08, 2008

As John Snow left his job as CEO of the transportation conglomerate CSX in 2003 to become the Secretary of the Treasury, his former company rewarded him by forgiving a $24 million loan and arranging his pension plan so that he will collect more than $2 million every year for the rest of his life.

Shortly after he took over at the Treasury, CSX sold a subsidiary that runs shipping terminals all over the world to Dubai Ports World — a company owned by the United Arab Emirates — for $ 1 billion. Later, Snow used his position to rubber stamp a proposed business deal by that UAE company, one that would have given it control over terminals at several ports in the United States.

While Snow was CEO of CSX, the company donated nearly $6 million to politicians, accounting for 85 percent of the donations made by the entire railroad industry. Most of the contributions went to Republicans. The company spent more than $25,000 on the Bush-Cheney campaign of 2000, and Snow gave more than $85,000 of his own money as well.

As he ran the company, he also bent the ears of presidents. He served in the Ford administration, advised President Ronald Reagan, and chaired a blue-ribbon commission on Savings and Loan reform for President George H.W. Bush. In return, CSX and the railroad industry won regulatory changes that allowed it to roll back safety measures, pass millions in liability damages onto the federal government and, for at least three years, pay zero income taxes on billions of profits.

Snow’s dual careers reached their apex in 2003 when he was named Treasury Secretary. In that position, he was required to scrutinize the deal involving Dubai Ports World for possible threats to national security. Though the UAE is officially an ally of the U.S., it nevertheless served as a way station for nuclear materials that a Pakistani scientist sold to the regimes of Iran and North Korea in 2006. At the time of Snow’s review of the deal, the U.S. was negotiating a free-trade deal with the UAE.

The agreement that would have allowed the UAE company to run the U.S. ports ultimately fell apart. Yet, until his resignation in June 2006, Snow continued to head the board charged with screening foreign companies that were to take over domestic firms in the homeland security field.

Snow began his career in public policy in the 1970s at the Department of Transportation, where he lobbied to loosen regulations on the railroad and shipping industries, and advocated limiting the liability damages transportation companies would have to pay to accident victims.

In 1977, he joined the company that would ultimately become CSX, where he was in charge of “governmental affairs,” or lobbying. He rose to CEO in 1985. Under his leadership, CSX swallowed up companies that ran railroads, coal transportation, shipping lines and international ports. In the meantime, he continued to shape the federal regulations that affected his industry. In 1980, he advised Ronald Reagan on regulatory policy during his successful presidential campaign; in 1995, House Speaker Newt Gingrich appointed Snow to a commission on tax reform. And for several years in the 1990s, Snow led the Business Roundtable (a private group made up exclusively of CEOs from 250 of the nation’s largest corporations) in its successful campaign to push through the passage of the North American Free Trade Agreement.

CSX prospered from Snow’s ability to wear both hats – the company’s profits grew to nearly $1 billion by 1998, yet CSX managed to avoid paying any federal corporate income taxes for at least three years, according to Citizens for Tax Justice. In fact, between 1998 and 2001, CSX collected rebates from the government worth a total of $164 million.

Snow was also able to help the company avoid expenditures of another kind – paying damages to the families of people killed in accidents caused by CSX’s negligence. After lobbying by CSX and other companies, Amtrak’s board (which included railroad industry executives) agreed to a legal loophole that foists CSX’s liability damages onto Amtrak. When someone is killed because of poor or nonexistent maintenance on tracks owned by CSX, Amtrak – the passenger train line subsidized by the federal government – must pay the damages won in subsequent lawsuits. The New York Times reported that the loophole has cost Amtrak more than $186 million as of 2005.

The deaths from derailments and signal failures on CSX-owned track were becoming so frequent that in 2002, just months before Snow took over the helm at Treasury, a federal investigator urged the government to form a special task force to investigate CSX. The Department of Transportation has never acted upon that recommendation.

Late in Snow’s tenure at CSX, the company began selling off some of the assets it had acquired in the previous decade. In his last months as CEO, the company negotiated a deal to sell its CSX Lines to the Carlyle Group (where former President George H.W. Bush is a senior advisor and shareholder) for $300 million. CSX Lines was a shipping company; Carlyle renamed the unit Horizon Lines, and it was awarded more than $100 million in federal contracts to run oceanographic ships for the Navy. In 2003—less than a year later—Carlyle doubled its money when it sold Horizon Lines to Castle Harlan LLC—a company with direct Bush family ties—for $650 million. (President George W. Bush once served on the board of directors of Castle Harlan.) CSX rewarded Snow with at least $36 million in bonuses and stock options, and also forgave a $24 million loan it had made to him earlier.

The company has a unique percentage of executives who move back and forth between high-level posts of federal government. Soon after Snow’s appointment, high-ranking posts throughout the federal government were laced with former CSX lobbyists and executives, including:

  • Arnold Havens, CSX’s lead in-house lobbyist who became the General Counsel of the Treasury;
  • David Sanborn, who ran the CSX shipping subsidiary Sea-Land Services, Inc. and then worked for Dubai Ports, was nominated in 2006 to be the U.S. Maritime Administrator;
  • Mike Parker, a CSX lobbyist appointed in 2001 to Assistant Secretary of the Army for Civil Works, where he advocated for a rule change to allow mining companies to dump fill waste into the streams of Appalachia. He’s once again a lobbyist, working for a client that recently won $500 million in Hurricane Katrina cleanup contracts;
  • Joseph Bogosian, CSX lobbyist who in 2001 was named Deputy Assistant Secretary for the Trade Development Bureau.
  • Christopher Koch, a senior vice president at CSX in charge of several shipping divisions, was named to the Department of Homeland Security’s National Maritime Security Advisory Committee.
Snow resigned from the Treasury Department in June 2006. He is now on the board of the Marathon Oil Company. President Bush appointed Henry Paulson, the CEO of investment bank goliath Goldman Sachs, to replace him. In the interim, the acting Treasury Secretary was Robert Kimmitt, who led the committee that vetted the proposed Dubai Ports deal for security concerns and found none. As Paulson joined the administration, Deputy Secretary of State Robert Zoellick left it, and went to Goldman Sachs.

Categories

International Finance | Middlemen | Government Officials | Homeland Security | Energy

Sources

  • Perform New Search
  • Print This Profile
  • Email This Profile