This article first appeared in the St. Louis Beacon, Nov. 19, 2011 - Within hours after announcing his Republican bid for Missouri governor, Ladue businessman David Spence -- who has never run for office before -- found himself in the midst of his first controversy.
And like fellow corporate executives who've jumped into politics -- notably Republican presidential hopeful Mitt Romney and U.S. Senate candidate John Brunner -- the scrutiny involves past business actions.
In Spence's case, the attention centers not on the plastic-packaging business that made his fortune, but on his recent years serving on the board, and then the holding company, for Reliance Bank.
In early 2009, Reliance Bancshares received $42 million in money from the federal Troubled Asset Relief Program, also known as TARP -- or simply, the "bank bailout.''
Last February, Reliance announced that it was postponing its first annual payment to TARP of $2.2 million because of continued financial strain.
And in between, in the fall of 2010, Spence spent $1.5 million to buy 500,000 shares of Reliance stock.
Those facts alone -- even without Spence's explanation -- are enough to touch off political debate because TARP is not a popular issue within the conservative Republican base and bankers aren't held in high esteem these days by the rank-and-file in either party.
In Spence's case, the Missouri Democratic Party also is questioning his explanations about his dealings with Reliance, particularly when compared with the bank's written statements filed with the federal Securities and Exchange Commission.
Spence said in an interview that "when the truth is out there" about his activities at Reliance, it will be clear that "I did more to help things."
Businessmen Flock to Run for Office
The bank issue is aside from the basic questions surrounding the candidacy of Spence, the third wealthy businessman from the St. Louis area to jump in as a Republican contender for statewide office in 2012, without any previous political experience beyond donating to other campaigns.
His announcement came just a day after developer and builder Chris McKee declared his candidacy for lieutenant governor, and just a couple months after Brunner launched his GOP bid for the U.S. Senate.
(McKee subsequently dropped out Friday when Lt. Gov. Peter Kinder, a fellow Republican, decided to run for re-election and abort a plan to run for governor.)
Although there are differences, all three cite the same reason for their candidacy: the lagging economy.
All three say their business experience makes them a better fit to fill public offices during trying economic times. All three also plan to spend their own money to bankroll their campaigns.
As Spence put it in an interview, when asked how much of his cash he was willing to commit: "I'm not going to have 'dumb' written on my forehead. It took too much to make (this wealth). But yes, I am, because that's how strongly I believe I can make a difference."
Why Are Gop Businesspeople Running?
Lloyd Smith, executive director for the Missouri Republican Party, said, "Like so many Missourians, civic leaders are extremely worried about the direction of our state and nation, and they realize that Barack Obama and Jay Nixon have failed in their attempts to create jobs and repair the economy. This concern about the abysmal Obama-Nixon record has prompted several business leaders who have never been involved in elective politics to consider running for office themselves. And as we saw in 2010, Missourians are eager to elect new leaders -- whether they come from the business community or are established conservative public servants."
But political analysts see the situation a bit differently. Dave Robertson, a political science professor at the University of Missouri-St. Louis, contends that prominent businessmen are jumping into politics because some prominent Republican politicians are jumping out.
McKee jumped in after the likely Republican nominee for lieutenant governor -- House Speaker Steve Tilley of Perryville -- unexpectedly dropped out. Spence announced after the once likely Republican nominee for governor, Lt. Gov. Peter Kinder, ran into trouble.
"There's sort of a vacuum in the appearance of Republican statewide candidates,'' Robertson said.
Add to that, he continued, the tea party's preference for new political faces and increasing dislike of incumbents.
George Connor, head of the political science department at Missouri State University, sees a similar "old guard, new guard" dynamic at work.
"The attraction (for businesspeople to politics) is a natural one,'' Connor said. That's particularly true for Republicans, he added, who embrace "an underlying message that government is the problem."
Former Donor to Kinder
After making comments for weeks about a possible candidacy, Spence has decided to challenge Kinder, an old college buddy and fellow Republican who has been expected to announce his bid for governor within days.
Friday afternoon, Kinder announced that he had dropped plans to run for governor and would endorse Spence instead. Sources say Kinder did so when it became clear that Spence was in the race to stay.
Such a decision came despite Spence's previous financial support for Kinder in the past. In fact, Spence donated $5,500 to Kinder's campaign less than a month ago, in what Spence called in an interview, "a gesture of friendship, to say it's not a 'Peter versus David' issue.''
"I know Peter, I respect him. He's given great service to the state,'' Spence said.
But the businessman added that he's forging ahead with his own candidacy because Spence believes that his personality, past and professional experiences make him a better Republican candidate to take on Gov. Jay Nixon, a Democrat.
Spence sidestepped his reasons for no longer supporting Kinder, saying he'd prefer not to get into the specifics of the lieutenant governor's problems -- which over the past six months have ranged from a torched campaign campaign car to questions about Kinder's frequent hotel stays in Missouri billed to taxpayers and to Kinder's acquaintance with a former stripper.
But after discussing the matter with family, friends and potential supporters, Spence said he concluded, "The cycle was right for someone who possibly was not a lifetime politician."
Later, he observed, ""I really can't take being in 'neutral' anymore."
Spence said he hopes to delay most interviews or most discussions of issues for a couple weeks, so he can hire a campaign team, "hone my message and button up my business interests."
But he has found it difficult to control the ensuing press frenzy once Spence confirmed his candidacy to the Washington Post on Monday. He conceded, "It's gone from 0-60 pretty quickly."
Compares Self to Christie
Spence, 53, is a graduate of Kirkwood High School and the University of Missouri-Columbia. After working in a family plastic-molding business that failed in 1984, Spence bought Alpha Packaging, then a small plastic-packaging company that had annual sales of about $350,000.
Spence said he had been turned down by 12 banks and purchased Alpha with the help of a federal loan through the Small Business Administration.
When he sold most of the interest in Alpha to a private equity firm in 2010, the firm's annual business was $200 million.
Spence also owns Legacy Packaging, a pharmaceutical-packing business based in Earth City, and a restaurant in Park City, Utah, run by a chef who's a friend.
Spence says he grew up in modest circumstances and sees his life as the classic American success story.
As for his style, he sees himself in the mold of New Jersey Gov. Chris Christie, who many Republicans had hoped would run for president in 2012.
Spence said he had been impressed by Christie as "a straight talker ... who told it like it is, and talked with the people, versus at them."
Then, the businessman added, "I had an epiphany -- 'That's me, that's my personality.' "
As he looks at Missouri's current economy and government, Spence said, "The management that's been in there, isn't working."
"If you have a business that's not growing with bad management, you make changes. That's the real world," he continued. "I have got a major in 'common sense.' I know how to get along with people, and I'm tough but fair."
Spence contended that he has the temperament and experience to tackle "a slow-growing cancer in this state called job loss."
"I'm a credible candidate, and I will work very hard for the 5.9 million Missourians," he said.
Spence has yet to take a position on two volatile, but related, subjects: a likely ballot proposal to eliminate Missouri's income tax and replace it with a sales tax and an effort by some Republicans to get rid of some union protections in Missouri's workplace.
Now, Missouri law allows for closed-union shops, where all employees pay union dues if a majority voted to be represented by a union. The so-called "right to work'' effort would bar such a requirement.
Spence said he is intrigued by some of the proposals but is still studying them. He added that he also thought it was best for Missouri voters to make the decisions.
In any case, he contended, "I do think we need to even the playing field with the states around us ... When people want to expand in the Midwest, we're not on the list at all because we're not competitive.''
Spence contended that businesses are preferring to locate new facilities in other states like Kansas, Iowa and Tennessee.
"We've got to look at it. If we're not competitive, what do we do?"
Spence equates the situation to a restaurant that loses business when a competitor opens up down the road: "Would you complain about it, or would you change your menu?"
Spence's Account of Reliance
Spence began serving on Reliance Bank's board in 2005. But he notes that he didn't join its 16-member holding company, which actually voted on TARP, until May 2009, several months after the holding company voted to accept the federal aid.
Spence resigned from the holding company and the board last March and says he did so, in part, because he objected to Reliance's decision not to make the $2.2 million payment to TARP.
Spence said he also had been disgruntled because most other holding-company board members had failed to follow through with 2010 promises to help infuse more capital into the bank -- which he says likely would have allowed Reliance to make the $2.2 million payment.
In September 2010, Spence says he did his share. He purchased 500,000 shares of Reliance stock, valued then at $3 apiece, for a total cost of $1.5 million. Overall, Spence then owned 588,824 shares of stock directly.
Spence said he began thinking about resigning a few months later, when most of the other 15 people on the board still had failed to put up money to help the bank. He adds that he probably should have resigned sooner than he did.
"What I wanted to do, and what the board wanted to do, are two different things," Spence said.
A spokesman for Reliance said the bank has every intention of repaying the TARP aid. Spence, he said, served the bank "with distinction."
Democrats have pounced on Spence's explanation of his resignation and note that Reliance told the federal Securities and Exchange Commission that Spence's departure had nothing to do with any disagreements over operations.
"On his first day as a candidate, Dave Spence either intentionally misled voters or he revealed that his bank made knowingly false statements to federal authorities," said Caitlin Legacki, Missouri Democratic Party spokeswoman.
"Dave Spence's bank took $40 million in bank bailout funds, refused to pay it back and now he is scrambling for excuses. Unfortunately for Spence, records from the federal authorities blow a hole in his latest excuse and Missourians deserve to know why he won't tell the truth."
Spence said he finds it ironic that Democrats are highlighting the fact that Reliance got TARP money, when the Obama administration (and the Bush administration) had supported it.
Spence added that he isn't a fan of such federal help, but believes it likely was necessary during those dark financial months of 2008 and early 2009.
"In a perfect world,'' he said, "I'm not in favor of government assistance at all."
But in late 2008 and early 2009, Spence continued, "we suffered a 100-year crisis in the banking industry'' and something had to be done to avoid an economic catastrophy.
"I don't support it and I wish it had never had to be used," he said. "In a perfect world, TARP would never have been invented, or used."
His point to the public, said Spence, was that he personally "did not get one cent'' from TARP.
Mckee Long Pondered Political Bid
Chris McKee, 43, is a graduate of Chaminade.
He said that a political career had been something that he has thought about for a long time. "It's not something that just came,'' he said. "To me, it's all about service."
But when Tilley dropped out, McKee saw an opening in the lieutenant governor's race and he knew he had to act quickly.
McKee said his candidacy reflects, in part, "frustration with this economy recovery, or lack thereof."
Like Spence, McKee wants to bring to government "skills I've learned in the private business world."
McKee is involved in two businesses. He is president of Optimus, where he "is responsible for the generation of new build-to-suit construction, leasing and development opportunities."
He also is among the owners of the newly opened Peabody Opera House downtown.
His father is the well-known developer Paul McKee.
McKee has yet to take positions on such issues as right to work or the proposed switch from a state income tax to a higher sales tax. He also plans to take several weeks to get more familiar with some issues and assemble a campaign.
McKee said he admired how Kinder has approached the lieutenant governor's office, which Kinder has held since 2005. McKee cited Kinder's "willingness to get out of Jefferson City,'' and his continued focus on jobs.
McKee said he recognized that a lieutenant governor doesn't have much direct power, but he believes that the post can be used to promote better economic policies.
"We don't seem to be coming out of (the recession) like we should,'' McKee said. "Are there other things we should be doing?"
UPDATE: By Friday afternoon, McKee had dropped out when Kinder decided to drop back into the contest and end his plans to run for governor instead. McKee endorsed Kinder's quest for a third term, and said he planned to look into other political opportunities.
Potential Pitfalls Are Plenty
McKee's short-lived candidacy underscore that while politics often welcome fresh faces, the newcomers often can't match the clout of veterans. There's also plenty of freshman pitfalls can get a campaign into trouble.
For all their deep pockets, all three businessmen face a similar daunting problem. "Their names are not well known," Robertson said. All three face rivals, Republican or Democrat, who have run statewide before.
"That disadvantage makes it harder for the Brunners of the Missouri to compete on an equal footing," Robertson said.
Connor agreed, citing a statewide candidate's need for a statewide political operation to help get out the vote. "These business guys will have to convince county Republican Party chairmen that 'I'm electable,' " Connor said.
And for all the pro-business talk, both professors observed that, as Robertson put it, "Running for office is not like running a business."
For one thing, even minor political mistakes get much more attention. As first-time candidates, all three will no doubt have some missteps, said Robertson, adding, "Rookie candidates are more likely to make rookie mistakes."