Ackman, a politically wired hedge fund manager, essentially made a $1 billion bet that Herbalife's stock will drop to the point of collapse, once regulators go after it. On Jan. 23, the day Markey sent those letters, the stock dropped by 14 percent. Last Wednesday, the FTC announced it's opening an official inquiry into Herbalife, prompting another sell-off of the stock and triggering a potentially huge payday for Ackman and his hedge fund, Pershing Square Capital Management.
As detailed by The New York Times, Ackman's overture to Markey was part of a complex campaign to put regulatory pressure on Herbalife, a company Ackman believes is a phony operation that preys on the poor. Ackman told the Times he will donate any profits he personally earns to charity; but his hedge fund clients would surely benefit from Herbalife's demise.
Markey told the Globe's Noah Bierman he took up the cause as a consumer issue and his staff evaluated it that way. Giselle Barry, a Markey spokeswoman, declined to identify the people in Markey's office who met first with a lobbyist sent on Ackman's behalf and then with Ackman. "Oversight staff is how I will characterize [them]," said Barry, via e-mail.
Ackman has an army of lobbyists and consultants working the anti-Herbalife campaign. Locally, the team includes Rasky Baerlein Strategic Communications. Larry Rasky, one of the principals, is a Democratic fundraiser and former Markey staff member. But Markey also contends he didn't know Rasky's firm represented Ackman until he read it in the Times.
Rasky told the Globe his firm had no contact with Markey or his staff and has been working with local community groups "to identify victims of the Herbalife scheme" and has been up front about Ackman's profit motive. The firm did no lobbying, according to Joe Baerlein, the other principal.
The hidden agendas, the former aide who is now doing work for a billionaire it's a ready-made script for "House of Cards." In this case, it's life imitating art, Washington style.
Markey is known for his consumer protection work, so there's precedent for taking on Herbalife. Since he won a special election last year and moved from the House to the Senate, Markey has weighed in on the recalled Chevy Cobalt cars; asked the FTC to make sure recent Facebook policy changes don't compromise user privacy; and sent letters to Instagram calling on it to end the ability to sell guns on its website.
In none of those cases, however, is there a crusader like Ackman who is betting $1 billion on his ability to destroy another company.
Wouldn't Markey want to know about Ackman's financial stake in Herbalife's fate before he helped his cause? If Markey's staff really kept him in the dark, it seems like a bad place to be, given where it ultimately left him: in the middle of a major news story about a Wall Street fat cat who stands to get even fatter with the help of politicians like Markey.
If Markey did know about Ackman's profit motive, he should have taken a pass on joining the anti-Herbalife crusade. Of all the consumer protection cases in the world, why is this such a priority for a senator from Massachusetts?
Last September, Markey voted "present," instead of yes or no, on the question of whether to give President Obama the go-ahead to use military force in Syria. Since then, he has taken a low-key approach to his job. He read from Dr. Seuss during a recent all-night effort by Senate Democrats to draw attention to climate change.
Markey's up for re-election this year to a full, six-year term. With no strong opponent on the horizon, ignorance-is-bliss must feel like a fine strategy. Yet what his staff knew but he allegedly didn't is a little too close for ethical comfort.
Joan Vennochi can be reached at firstname.lastname@example.org. Follow her on Twitter @JoanVennochi.