Money Well Spent: RNC Donation Helped Wealthy Businessman Secure Ambassadorship

Roland Arnall certainly never has tried to hide his support for the Republican Party. He personally donated $5 million to help run a pro-Bush ad in 2004 and Ameriquest, a mortgage company Arnall founded, gave $250,000 to President Bush’s inaugural in 2005. Arnall and his wife, Dawn, also helped raise more than $200,000 each to secure Bush’s re-election.

But another donation of Arnall’s has received little attention. In 2004, Arnall donated $5 million to help fund the Republican National Convention in New York City. Arnall gave the donation in the name of RoDa Drilling LLC, a company he co-owned with his wife. The donation was the second-largest given to the RNC, trailing only the nearly $7 million given by Mayor Michael Bloomberg of New York City, who was a Republican at the time. It was more money than was donated by Citigroup and IBM combined, and more than any single donation to the Democratic National Convention, all from a small Nevada company that has no website.

Arnall may have been looking to bury this donation, or there may have been a business reason; Arnall did not respond to a request for comment. Either way, the donations did not go unnoticed by a very important person: President Bush himself, who in 2005 appointed Arnall to serve as ambassador to The Netherlands.A Small Company Writes a Big Check

RoDa Drilling shows up rarely in the public record. The LLC was registered in the state of Nevada and appears to be embroiled in a lawsuit with Oklahoma oil exploration company Zenergy Inc. The suit, Zenergy Inc. v. Palace Exploration Co., revolves around 1,554 oil and gas properties/prospects pursuant to “hundreds of agreements.” The suit also alleges that RoDa was under investigation by the IRS for transactions between RoDa and Palace Exploration Co.

Aside from the lawsuit and RoDa’s 2004 donation to the RNC, it’s unclear what else the company has been up to. A search of Google and Lexis/Nexis turns up precious little information about the company, and the Nevada Secretary of State simply shows that Roland and Dawn Arnall are the co-owners and that the filing is in default as of Oct. 1.

RoDa took advantage of the fact that companies and individuals are able to make unlimited donations to convention committees.

“That is one of the last free-for-all loopholes where people can write unlimited checks, and they do,” said Mary Boyle, vice president of communications for the watchdog group Common Cause in Washington, D.C. Boyle said that conventions were once financed publicly, but that corporations have taken an increasing role in funding them.

The size of the RoDa Drilling donation brings up the obvious question of a quid pro quo, Boyle added.

“Certainly, when people make six-, seven-figure donations, they are looking for access and influence.”

A Contentious Confirmation Battle

One of the few places RoDa does come up is with regard to Arnall’s ambassadorial confirmation. Arnall pledged to sever financial ties with RoDa Drilling, Ameriquest and a number of other companies and organizations. Nevertheless, Arnall’s appointment was controversial on both sides of the Atlantic. In The Netherlands, Labor M.P. Bert Koenders criticized the governing party for accepting the nomination of Arnall. In an interview with the Associated Press, Koenders said, “There are doubts about Arnall’s integrity because there are so many lawsuits against him. You have to be sure someone is perceived to be of the utmost integrity.”

Those lawsuits were class-action suits against Ameriquest, some of which were settled for $325 million in January of 2006. The suits alleged predatory lending practices by the subprime lender.

The suits brought Arnall under heavy fire from consumer activists and nearly scuttled his appointment. During the confirmation hearings, Sen. Chuck Hagel, R-Neb., voted against confirmation, telling The New York Times, “I do think we should send people who are not under a cloud of investigation. Mr. Arnall — fairly or unfairly — finds himself in that position. I need more answers before I can move forward.”

And Sen. Paul Sarbannes, D-Md., sharply criticized Arnall and Ameriquest.

“All of this is what we call predatory lending,” he said, according to the report. “Preying on the lack of knowledge and inexperience of borrowers who are often on the low end of the scale.”

But Sen. Norm Coleman, R-Minn., voted for Arnall’s confirmation, and said he was a worthy candidate.

“His personal actions have never been called into question. His credibility and integrity were praised by members from both sides of the aisle during his hearings. For these reasons, it is inappropriate to hold up Mr. Arnall’s nomination.”

Ultimately, Arnall was narrowly confirmed by the Senate, which was at that time under Republican control.

Ameriquest but a Memory

Today, Ameriquest has vanished from the landscape. Citigroup purchased Ameriquest and shut down its retail lending arm, keeping it alive only through its wholesale brand, Argent Mortgage. The company, which burst on the scene in 1997 and grew to the point where it owned blimps and the naming rights to the Texas Rangers’ home field, has now faded from view. Citigroup, meanwhile, is struggling with the debts it obtained from the subprime lender; like almost every mortgage company, it has been hit hard by the recent collapse in the mortgage industry.

Ameriquest’s fate is hardly unique, as the meltdown in mortgages continues to affect the lending industry. Industry tracking site ml-implode.com lists it among 183 lenders who have collapsed or disappeared since 2006.

But Arnall continues on, still ambassador to The Netherlands, still a multibillionaire. His purchase of an ambassadorship got him out of the country at precisely the right time, just before the floor fell in. And he’s been happily ensconced in his position ever since.

What of 2008?

The donation by RoDa Drilling is important not just in the context of Arnall’s ambassadorship, but also the way that money flows, unfettered, into both parties for their national conventions. There are no donation limits, so companies and organizations take advantage of the moment to spread the wealth around. About $78 million was poured into the 2004 RNC convention by donors, such as pharmaceutical giants Pfizer, which gave $1.6 million, and Bristol-Meyers-Squibb, which gave $250,000. Meanwhile, the Democrats took in more than $50 million in 2004, including more than $3 million from telecommunications behemoth Verizon.

Some changes were made this year to try to limit lobbyists and corporations from buying influence, including a ban on corporate parties for individual members of Congress, a tradition at past events. But Common Cause’s Boyle said it remained to be seen how that would play out.

“We’re already seeing lots of stories in newspapers about lobbyists scheming and planning how to get around that,” she said, adding that lobbyists are considering whether a party thrown just before or just after a convention would be legal.

Regardless of whether that changes, the money that will be pumped into the Republican and Democratic National Conventions in 2008 will likely be even greater — the RNC alone could top $100 million. It will be interesting to see how the money flows into St. Paul, who it’s flowing from and what donors hope to gain from it.