When Lamar Alexander stopped in Baltimore a year ago on his quest for the presidency, he was asked why he had accepted $232,000 merely for stepping down from the board of Martin Marietta Corp. when it merged with Lockheed Corp.
After all, an ordinary aerospace worker might not earn that much in six years of full-time work. And even as the former Tennessee governor and other top company officials were reaping their payoffs, 12,000 workers were losing their jobs.
Yet Mr. Alexander shrugged off the question.
"It is the amount of money that I would have been entitled to whether I stayed or whether I went," he said.
Mr. Alexander's aplomb at receiving such a windfall may be an acquired habit. For years, he has shown an uncanny ability to turn a modest investment or even more modest effort into a handsome fortune.
His stump speeches stress his experience as an "entrepreneur," his work in the "real world," his status as an "outsider." He has turned a checked shirt into a symbol of salt-of-the-earth populism.
But the red-and-black flannel shirt is campaign camouflage, a disguise for a man who earned more than $1 million in 1994 with no real job, one who has long inhabited a world of money and power unimaginable to ordinary working Americans.
For 20 years, Mr. Alexander has moved profitably between the business and political realms of Tennessee. The Republican attorney has mixed with those who turned their wealth into political influence, and he has himself converted political prominence into wealth.
The rewards have taken various forms: consulting jobs, director's fees, speaking honorariums, stock options, investment deals. No one has suggested that he sold favors while in public office. During and after his service as Tennessee governor, president of the University of Tennessee and U.S. secretary of education, what he offered to ambitious entrepreneurs was the invaluable blessing of a big-time politician.
"It's obvious Lamar has traded on his former position as governor," says Lloyd C. Daugherty, chairman of the Tennessee Conservative Union and a veteran Republican activist who has long been critical of Mr. Alexander. "Nothing else explains these sweetheart deals."
As the polls have transformed him in recent days from long shot to contender, his lucrative deals have drawn intense media scrutiny.
Last week Mr. Alexander bristled at comparisons to Hillary Rodham Clinton's controversial commodities investment, in which $1,000 invested with a well-connected friend brought a profit of $100,000.
He tried with little success to distinguish between his deals and Mrs. Clinton's before retreating to a generic defense.
"I plead guilty to being a capitalist," he said.
The evidence for Mr. Alexander's distinctive brand of capitalism has been gathered by Tennessee state investigators, a U.S. Senate committee and reporters in Tennessee and elsewhere.
Although the facts have been widely reported since 1991, they are attracting broad public attention only now that Mr. Alexander appears to have a reasonable shot at the Republican nomination.
Among Mr. Alexander's more controversial financial arrangements:
* The newspaper: In 1981, as governor, Mr. Alexander was one of seven well-connected Tennesseans, including then Senate Majority Leader Howard H. Baker Jr., who acquired for $1 apiece an option to buy the Knoxville Journal. Instead the group brokered the paper's purchase by the Gannett Co., receiving Gannett stock and options to buy more shares in return. Mr. Alexander eventually sold his stock for $620,000.
* The prison corporation: In 1985, Gov. Alexander proposed a sweeping program to privatize Tennessee's prisons just months after his wife, Leslee B. "Honey" Alexander, had invested $10,250 in the Corrections Corporation of America. To avoid charges of conflict of interest, she swapped her stock for 10,000 shares of a life insurance company, which she sold in 1989 for $142,000.
* The child-care venture: As he left the governor's office in 1987, Mr. Alexander helped found Corporate Child Care Inc. to organize on-site day-care centers at workplaces, investing $6,605 with his wife in the new venture. His latest financial disclosure form estimates the stock's value at $1.1 million, or more than 150 times more than the Alexanders paid for it.
* The Whittle deals: In 1987, Whittle Communications, founded by Mr. Alexander's close friend Christopher Whittle, paid him $125,000 in consulting fees and gave him a $10,000 stock option. Mr. Alexander's $10,000 check was not cashed -- a secretary reportedly mislaid it -- until Mr. Whittle had sold part of his company for $185 million. Then Whittle Communications bought back the stock for $330,000 from Honey Alexander, to whom Mr. Alexander had transferred it. It was a gain of 3,200 percent in less than a year.
* The fees: Mr. Alexander has collected well over $1 million since 1987 in director's and consulting fees from enterprises ranging from Belmont University in Nashville to a frozen food company in Knoxville. In some cases the work he has performed appears to have been minimal.
* The vacation: In 1987, Mr. Alexander took his family to Australia for six months, an adventure he described in his book "Six Months Off." He received a $45,000 advance for the book, $7,500 for movie rights -- and took tax deductions totaling $128,308 for his family's living and travel costs, on the theory that they were an author's business expenses.
Mr. Alexander's business connections and investment instincts have made him a rich man. When he was elected governor in 1978 he had a net worth of $151,000. Today he is worth between $3.4 and $6 million, according to his financial disclosure statements. Just four of his investments, totaling $22,000, produced a spectacular payoff of about $2 million.
Asked yesterday on NBC's "Meet the Press" whether such returns weren't "rather unusual, Mr. Alexander replied: "It is unusual, but that's what this country's about. The whole reason people struggle to come to this country is to have the chance to go from nothing to something."
On the campaign trail in New Hampshire, where Mr. Alexander has been questioned about his finances every day since his strong third-place finish in the Iowa caucuses, the candidate has emphasized the benefits of his private-sector experience.
"Most people would rather have a president who helped start a business," he says, referring to Corporate Child Care.
Yet his work in launching the day-care business appears extremely limited. He tapped friends for start-up money and solicited business from potential corporate clients.
Then, just as the company was getting off the ground, Mr. Alexander left for his Australian sabbatical. The business was run by its president, Marguerite W. Sallee, who as Tennessee's human services commissioner had conducted a study of the need for corporate day care.
In the Gannett sale, Mr. Alexander seems to have done literally nothing to earn his rich return. Al Neuharth, the retired chairman of Gannett, said last week that Mr. Alexander and his Tennessee partners did not even have to hunt for a buyer. Gannett found them, he said.
"Do you guys really want to buy and run a newspaper?" Mr. Neuharth recalled asking the group. "Or do you want to make a deal with us?"
In New Hampshire last week, Mr. Alexander said he and his partners intended to buy the paper but "couldn't raise the money" and then decided to sell their option to Gannett.
"You wouldn't want a president that would be dumb enough to give away the right to buy the Knoxville Journal," he said.
Ron McMahan, one of the partners in the Journal sale, confirmed that Mr. Alexander's role was completely passive. "I don't know of anything Lamar did in the entire situation," he said. "I don't know a phone call he made or a thing he did to contribute to it."
M. Lee Smith, a Nashville political analyst and publisher of newsletters, says Mr. Alexander's wealthy partners in various enterprises never expected him to assume a demanding role.
"I think what happened is that some people who are political or personal friends gave him a pretty good opportunity to make a significant amount of money without much investment or sweat equity," Mr. Smith said. "I don't think they wanted anything in return, and they didn't get anything in return."
But Mr. Alexander was a prime catch for any business venture: well-known, well-connected and able to lend credibility to a deal by his mere presence. "He got the opportunities because of who he was," Mr. Smith said. "Would you or I have gotten them? Probably not."
Mr. Alexander was not always scrupulous about keeping his public life separate from his private ventures. When he was still in his final weeks as governor, for instance, he wrote to some of Tennessee's largest companies to drum up clients for the planned child-care business. On "Meet the Press" yesterday, he said he had "no regrets" about that. "Other people were writing resumes. I wrote a few letters," he said.
When he did take steps to avoid conflicts of interest, Mr. Alexander's precautions were sometimes unconventional.
In several instances, including the Corrections Corporation and Whittle Communications deals, Mr. Alexander recognized that holding the stock might pose a conflict. But rather than sell it, he transferred it to his wife or left it in her hands -- a remedy that obviously would not prevent Mr. Alexander from benefiting from the investment.
Another case in which Honey Alexander became nominal owner involved an East Tennessee inn called Blackberry Farms in which Mr. Alexander had purchased a one-third share for $8,000. After becoming president of the University of Tennessee, Mr. Alexander directed subordinates to hold university functions at Blackberry Farms, though prices were double the area's average.
Several administrators objected because they knew of their boss' investment, but Mr. Alexander told them he had "disposed his interest," according to a report by the Tennessee comptroller's office. Blackberry Farms subsequently catered 14 university events for $64,626.
In fact, Mr. Alexander had merely transferred the stock to a trust for the benefit of his wife -- as his university colleagues discovered only after he left his post as president.
The same comptroller's report found that Mr. Alexander -- again over the objections of underlings -- had the university pay $36,472 to a Nashville firm run by his former gubernatorial chief of staff for advice on how to increase football ticket sales.
Since completing his term as secretary of education three years ago, Mr. Alexander has spent virtually all his time on his presidential campaign, holding 148 fund-raisers in 1995 and spending 80 days in Iowa alone. But Mr. Alexander collected $421,871 in 1994 and $295,000 last year as counsel to Howard Baker's Nashville law firm.
"I tried to design the best system I could to let him work with us and earn some money and stay free to run for president," the former senator told Memphis reporters in March. But Mr. Alexander took a leave of absence from the firm this month after millionaire publisher Steve Forbes, a Republican presidential rival, raised the issue of the law firm in the campaign.
Until then, Mr. Alexander had just three clients, none of whom required him to do actual legal work. One was Processed Foods Inc., which has paid Mr. Alexander more than $1 million in fees, dividends and capital gains since 1988.
Over the years, Mr. Alexander has invested some $230,000 in Processed Foods; his stock is now valued at more than $1 million.
Graham Hunter, president of Processed Foods, said Mr. Alexander's assistance came not in the form of much practical work, but as a "guiding light" for the business. "I guess the biggest asset he's been is that he's kind of a visionary," Mr. Hunter said.
The other clients were Texas Instruments and the Baptist Hospital of Nashville.
"The hospital president has talked to him about what he has observed in his travels and what he has observed when he was in Washington that was creative and innovative," a spokeswoman told the Washington Post, explaining what Mr. Alexander did for the $10,000 a month the hospital paid the law firm.
Mr. Alexander's investments and fees -- as well as Mrs. Alexander's inherited wealth -- finances a very comfortable lifestyle. The couple purchased their current home in Nashville for $351,000 in 1992; thoroughly renovated, it is now valued at $868,200, property records show.
The Alexanders also have a "log mansion" vacation home near the Blackberry Farms inn and in 1994, they sold a duplex with water views at Hilton Head, S.C., for $420,000.
Whether closer scrutiny of his financial life will be a bump in his campaign or a more serious obstacle remains to be seen. If Mr. Alexander survives the Republican primaries, one Clinton campaign official suggested with a smile, he would have a hard time making an issue of the Clintons' money-losing investment in the murky Whitewater development in Arkansas.
Lee Smith, the Nashville political analyst, says reports of Mr. Alexander's investments in Tennessee "probably raised more than a few eyebrows" but did not undermine his popularity.
Why? "Partly because people believe Lamar Alexander is an honest man," he said. "That's the perception people have of him here in Tennessee."
And associates say Mr. Alexander still is a small-town boy at heart, despite the exponential growth of his net worth.
RF "He likes just regular folks," said Mr. Hunter of Processed Foods.
Yet the contrary images of Lamar Alexander don't sit well with some of those folks outside Tennessee, such as Dan Stefanski. President of a United Auto Workers local in Essex that represents workers at Lockheed Martin, he first went to work as a machine repairman at Martin Marietta in 1952.
Asked what he thought about Mr. Alexander's $232,000 payment for leaving the board, Mr. Stefanski snorted with derision.
"They're getting theirs, and to hell with us," he said, adding, "He is doing wonders for flannel shirts, though, isn't he?"
Republican presidential candidate Lamar Alexander has benefited from some lucrative business deals, most involving companies owned by friends in Tennessee. His family's net worth soared from $151,000 he was elected Tennessee's governor in 1978 to more than $3.4 million today, partly due to investments and generous consulting fees.
The deal .. .. .. .. .. .. .. ..Investment .. .. .. ..Sale proceeds or
.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. . .. ..current stock value
In 1981, Gov. Lamar Alexander
and six others acquired an
option to buy the Knoxville
Journal, but instead brokered
its purchase by the Gannett Co.
He received Gannett stock
and options. .. .. .. .. .. .. .. .. ..$1 .. .. .. .. .. ..$620,000
In 1983 and 1984, Governor
Alexander's wife invested in
the Corrections Corporation
of America. She later swapped
that stock for 10,000 shares of
an insurance company. .. .. .. .. ...$10,250 .. .. .. .. ..$142,000
In 1987, Mr. Alexander
helped found Corporate Child Care
Inc. to organize on-site day-care
centers at workplaces. .. .. .. .. ...$6,600 .. .. .. .$1.1 million
In 1987, Whittle Communications
gave Mr. Alexander the option
to purchase stock in partial
exchange for consulting work. .. .. ..$10,000 .. .. .. .. .$330,000
In 1982, Mr. Alexander began
buying stock in Processed Foods
Inc., a frozen-food company based
in Knoxville, Tenn. .. .. .. .. .. ...$230,000 .. .. ..$1.1 million
Corporate and legal fees:
* Martin Marietta Corp. -- $94,000 in director's fees in 1994; $232,000 in March 1995 in director's fees and benefits when the company merged with Lockheed Corp.
* Baker, Worthington (later Baker, Donelson) law firm -- $421,871 for limited legal work in 1994; $295,000 in 1995.
* Processed Foods -- $393,000 in consulting fees from 1988 to 1991.
* Whittle Communications -- $125,000 in consulting fees in 1987.
* Belmont University -- $150,000 for consulting work in 1987 and 1988.