House Speaker Nancy Pelosi, the most powerful woman in Congress, proudly sang the praises of her longtime friend and major Democratic donor Eleni Tsakopoulos-Kounalakis during the California real estate developer’s confirmation hearing in November as U.S. ambassador to Hungary.
“My husband and I are here as friends of the family and admirers of the Tsakopoulos-Kounalakis family,” she told the Senate Foreign Relations Committee at the Nov. 18 hearing. “I salute her for her patriotism and for all that she will bring to this position.”
What the 12-term California Democrat didn’t say was that her husband, Paul Pelosi Sr., a California-based investment banker, has made more than $1 million as part of a business relationship with the new ambassador’s father, Angelo Tsakopoulos, that dates back nearly 20 years.
While ambassadorships often are part of a “spoils system” that rewards big donors and the politically well-connected, the Pelosis’ relationship with Mr. Tsakopoulos goes well beyond the business-as-usual label.
Since 1991, Mr. Pelosi’s real estate partnership investments with Mr. Tsakopoulos have netted him between $1.4 million and $9 million, according to Mrs. Pelosi’s personal financial disclosure statements. In 1993, Mrs. Tsakopoulos-Kounalakis joined the business, AKT Development Corp., which was founded by her father, becoming its president in 1997.
Craig Holman, legislative representative for Public Citizen, a Washington, D.C.-based consumer advocacy group, described the appointment of ambassadors as a “favoritism system based on money.” He said that in this case, Mrs. Pelosi should have mentioned her family’s business ties to the Tsakopoulos-Kounalakis family during the confirmation hearing.
“It would have been better if there was a conflict of interest to clear the air,” he said.
Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington (CREW), said that while she did not see a conflict of interest for Mrs. Pelosi to be pushing the nomination of someone with whom her family had business ties, she saw the appointment as part of a larger problem of how ambassadorships “are not given to the people best qualified but best connected.”
Ronald E. Neumann, president of an organization of retired senior diplomats, said qualifications should be key for ambassadors and the number of political appointments should be reduced to 10 percent. Traditionally, around 30 percent of the ambassadorships go to political appointees and 70 percent to career diplomats.
“Too many get the job purely because of political donations and without qualifications,” said Mr. Neumann, head of the American Academy of Diplomacy and a career foreign service employee who was ambassador to Afghanistan, Algeria and Bahrain.
Mr. Pelosi said there was “no connection” between his businesses and his wife’s role in helping Mrs. Tsakopoulos-Kounalakis become ambassador. He said he knew of Mrs. Tsakopoulos-Kounalakis’ interest in the job, and that she had approached several people for help including his wife.
But, he said, she got the appointment “without any of my consultation or help.
“There is no story here,” he said. “My business dealings have nothing to do with my wife’s political career.”
Mr. Pelosi acknowledged that he and the ambassador’s father have been friends since the 1970s and that he had invested in several partnerships with him, adding that “some did great. Some went bust.” He called Mr. Tsakopoulos an “ethical partner” who has been “enormously successful.”
Mr. Tsakopoulos did not respond to questions e-mailed to an official of his firm as requested.
Mrs. Tsakopoulos-Kounalakis declined to comment. She and her husband, Markos Kounalakis, former president of Washington Monthly, have donated $438,880 to federal candidates and committees since 1989 with 95 percent going to Democrats, according to the Center for Responsive Politics (CRP). Most of the donations were in her name.
Mrs. Pelosi’s House financial disclosure statements show that since 1991, Mr. Pelosi has invested in at least four real estate deals with AKT Development. He held interest in two AKT partnerships at the end of 2008, according to the financial disclosure forms.
The CRP, a research group based in Washington, D.C., that tracks money in politics and the effect of money and lobbying activity on elections and public policy, ranked Mrs. Pelosi as the 13th wealthiest member of the House in 2008, thanks in large part to her husband’s investments. CRP put the couple’s net worth at $31.3 million.
President Obama nominated Mrs. Tsakopoulos-Kounalakis as ambassador to Hungary in October, with the White House describing her in a statement as a “businesswoman, civic leader and philanthropist,” saying she had “spearheaded major projects that are now home to thousands of families.” The statement said she had “worked tirelessly on public policy issues both locally and nationally.”
Like his predecessors, Mr. Obama has rewarded major political fundraisers with ambassadorships - nearly all of whom raised significant amounts of money for his presidential campaign.
But the Tsakopoulos-Kounalakis nomination was an unusual choice in that she was not an Obama fundraiser, but a Hillary Rodham Clinton campaign bundler in the 2008 presidential race, who pledged to raise at least $100,000. She has raised more than $1 million for Mrs. Clinton since the former first lady’s race for the U.S. Senate in 2000.
A November CRP study said Mr. Obama appointed 26 bundlers from the 2008 campaign to ambassadorships - 24 of whom had raised money for him. Only two raised money for others - Mrs. Tsakopoulos-Kounalakis and former Utah Gov. Jon Huntsman, now ambassador to China, who raised at least $100,000 for Sen. John McCain, the 2008 Republican presidential candidate.
Mrs. Tsakopoulos-Kounalakis became an Obama supporter after Mrs. Clinton left the 2008 race, donating $4,600 to his campaign.
In January, Mrs. Pelosi and Angelo Tsakopoulos stood next to the new ambassador as she was sworn in by Mrs. Clinton, now secretary of state. Her confirmation was never in doubt, having received endorsements at the November hearing from both of California’s Democratic Sens. Dianne Feinstein and Barbara Boxer, along with her fellow Greek-American, Republican Sen. Olympia Snowe of Maine.
Mrs. Tsakopoulos-Kounalakis was confirmed by the Senate on Dec. 24 and sworn in on Jan. 7.
Nadeam Elshami, a spokesman for Mrs. Pelosi, said the speaker “did support” Mrs. Tsakopoulos-Kounalakis in her bid to become ambassador, noting that “recommendations are made to the administration by a variety of people for positions within the administration.”
“And,” he said, “it is not unusual for members to testify on behalf of nominees.” He noted that the two families “have known each other for years, going back before the speaker was in office.”
Mr. Elshami said Mrs. Pelosi complied with House rules and that her husband’s investments with the Tsakopoulos-Kounalakis business were listed on her annual personal financial disclosure statements.
The White House declined to comment for the story, choosing not to answer questions about the nomination and what role, if any, Mrs. Pelosi played in the selection
A State Department spokesman said only that ambassadors, whether political appointees or career diplomats, are named by the president with the advice and consent of the Senate, and serve “at the pleasure of the president.
“We are not going to comment on the process by which ambassadors are selected,” said the spokesman.
Until her appointment, Mrs. Tsakopoulos-Kounalakis was president of AKT, one of the largest land development companies in Northern California. She was replaced at AKT in October by her brother, Kyriakos Tsakopoulos, an Obama bundler who pledged to raise $50,000 for his presidential campaign.
The four partnerships reviewed by The Washington Times in which Mr. Pelosi was involved with AKT were active at some point during a time that Mrs. Tsakopoulos-Kounalakis was either an employee or president of the company.
According to Mrs. Pelosi’s House financial disclosure statements, Mr. Pelosi made two investments with the Tsakopoulos family in 1991 - a partnership known as Grantline 208, a 208-acre parcel of vacant land, and another called Mosher Partners, which included 550 acres.
Mr. Pelosi put up between $250,001 and $500,000 in the Grantline partnership, whose value jumped to between $500,001 and $1 million two years later, according to the speaker’s financial disclosure forms. He exchanged his Grantline interest in 1997, although the forms are not clear on what happened to the investment after that.
Also in 1991, Mr. Pelosi invested between $250,001 and $500,000 in the Mosher partnership, coming up with an additional $50,001 to $100,000 in 1997, according to the disclosure forms, which noted that the property jumped in value to $1 million to $5 million in 2002.
In 2003, the Mosher partnership sold part of the land and Mrs. Pelosi reported that her husband had a capital gain of between $100,001 and $1 million. On her financial disclosure forms, she valued his remaining interest in the Mosher partnership at between $250,001 and $500,000 at the end of 2008, the last period for which records are available.
In 1995, Mr. Pelosi invested $250,001 to $500,000 in a partnership with Mr. Tsakopoulos called Trux Gate, which owned land near Sacramento. Twenty months later, the partnership sold part of the land to a shopping center developer, earning Mr. Pelosi a capital gain of $1 million to $5 million, according to his wife’s disclosure statements.
Mr. Pelosi, Mrs. Tsakopoulos-Kounalakis and a third partner sold the remaining Trux Gate property in 2004 for $2.6 million, with a capital gain for Mr. Pelosi of at least $100,001, public records and the disclosure forms show.
In 1997, Mr. Pelosi invested between $1 million and $5 million in another AKT partnership known as Stoneridge, reporting capital gains of $100,001 to $1 million in both 2003 and 2004, according to his wife’s disclosure statements. He valued his remaining interest at $500,001 to $1 million at the end of 2008, the last year for which the disclosure records are available.
Last year, Mr. Pelosi bought the California Redwoods of the newly created United Football League, and has since changed the team’s name to the Sacramento Mountain Lions. Angelo Tsakopoulos is a minority investor in the team.