In April 2019, Sen. John Hoeven met with a lobbying delegation in his office. His meeting with the Independent Community Banks of North Dakota appeared to be routine, but for one thing: Hoeven owns a large share of First Western Bank and Trust, one of the banks represented at the meeting. He also sits on the board of the bank, which was started by his father. As he stood feet away from the bank’s CEO for a photo op during the lobbying meeting, he already had a vested interest in the company’s success, having purchased additional stock in it just weeks prior.
It’s no surprise that First Western would have an interest in meeting with Hoeven. His committee assignments make him an important lawmaker for the bank. First Western offers agricultural banking programs, and Hoeven sits on the Agriculture Committee and serves as ranking member of the Appropriations Subcommittee on Agriculture. In those capacities, Hoeven works on issues that could impact First Western, and therefore his own personal finances. He has advocated for at least one federal program that the bank is involved in.
The relationship between Hoeven and First Western also raises a legal question, beyond the conflict of interest. Senate rules generally forbid senators from serving on the boards of corporations. There’s a narrow exception to that rule, but in order to meet it, the senator’s committee assignments can’t give them any authority over the corporation. Hoeven’s board membership with First Western seems to fail that test.
Hoeven’s connection to First Western recently became a source of controversy in North Dakota state politics, when the legislature voted on a bill that critics said was a bailout for the bank. A lobbyist involved in pushing that bill worked in Hoeven’s gubernatorial and Senate offices, and a consulting firm the lobbyist leads called Odney is currently one of Hoeven’s top campaign consultants. A second one of Odney’s top executives is Hoeven’s former chief of staff. Both men lobby on the federal level, and their lobbying activity has been tightly focused on the Senate. Odney’s close connections to both Hoeven’s Senate office and First Western add to the interconnectedness of Hoeven’s legislative duties and his personal finances.
The senator and the bank
First Western Bank and Trust was founded by Hoeven’s father in the 1960s. Hoeven has served in executive and board membership roles with it going back to the 1980s. Hoeven personally has a large stake in it, at one point owning 39% of the bank’s parent company, Westbrand, Inc. First Western’s website features a picture of Hoeven, taken from his Senate office’s site, and identifies him as a member of the bank’s board of directors. Each year, Hoeven reports a multimillion dollar interest in the bank on his Senate personal finance filings. The filings also identify him as a member of the board.
In addition to typical banking services, First Western has an “Ag Banking” program that offers agricultural banking services. It’s those services in particular that would seem to pose a conflict for Hoeven’s legislative duties.
First Western offers some of its agricultural financing programs through the federal government, according to the bank’s website. The site says, “We offer a variety of ag financing solutions in house or jointly with the Farm Services Agency and Bank of North Dakota.” The Farm Services Agency (FSA) is an office of the U.S. Department of Agriculture (USDA). A search on the agency’s website confirms First Western is a “current FSA guaranteed lender.”
Hoeven is the ranking member of the Senate Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration and Related Agencies, which oversees the USDA’s budget and has jurisdiction over agricultural banking issues. In that capacity, he has been a persistent advocate for FSA lending.
In 2017, Hoeven introduced legislation that would increase the maximum loan amounts available through the FSA. The increases were later adopted into the 2018 Farm Bill. During an interview, he identified the lending program as one of his priorities when crafting the bill, and his office took credit for the inclusion of the loan increases there. In a release last year, Hoeven praised farm lenders for their “critical role in the agriculture economy” while highlighting his work to boost funding for the FSA program in the 2021 budget.
Hoeven also sits on the Senate Committee on Agriculture, Nutrition, and Forestry, which poses additional conflict concerns. One of the committee’s areas of jurisdiction is crop insurance, which First Western offers through its Ag Banking program. Hoeven has named crop insurance as another key legislative priority, calling it the “primary risk management tool for producers.”
Those committee positions appear to put Hoeven in a position to make or influence federal rules that impact a company in which he has a multimillion dollar interest. Instead of shying away from the conflict, Hoeven seems to have paid special attention to issues relevant to First Western.
Beyond the conflict of interest, Hoeven’s board membership with the bank raises a legal question. Senate rules generally bar senators from serving on corporate boards. There is a narrow exception for instances where the member meets three criteria: the senator must have served on the board for two years before joining the Senate, board involvement must constitute just a minimal time commitment, and the committees the senator sits on can’t have jurisdiction over an agency that could have authority over the company.
It seems dubious that Hoeven’s board membership meets the last of those requirements. As the ranking member of the Senate Appropriations Subcommittee on Agriculture, Hoeven has authority over the USDA’s budget. Meanwhile, First Western does some of its lending through a USDA program. That seems like the kind of arrangement the rule was designed to prevent. It is possible, however, that the Senate ethics office has signed off on the board membership without publicizing their decision.
A shared network
Earlier this year, Hoeven’s connection to First Western caused a stir in North Dakota state politics, when the state legislature considered a bill that critics said represented a bailout for the bank.
The bill would have directed $10 million to a financially strained rail facility. The funding was intended in part to spark the facility’s operation, but the majority of the funds would go to buy it out from a trio of banks that acquired it during foreclosure. One of those banks was First Western. The bill easily passed the state Senate but failed in the state House after the Associated Press raised questions about its connection to Hoeven. Hoeven denied any knowledge of the bill when asked about it by a reporter.
A lobbyist who pushed the bill on behalf of the nonprofit group seeking to buy the facility, Shane Goettle, is closely linked to Hoeven. He served as the head of the state commerce department when Hoeven was the governor of North Dakota, then as his state director in the Senate. Now he is the CEO of the communications and public affairs firm Odney. The firm’s president, Don Larson, is also a Hoeven alumnus, having served as Hoeven’s chief of staff for six years, and ran three campaigns for him.
While Odney’s CEO lobbied for a bill that would direct taxpayer spending to Hoeven’s bank, the firm also acted as one of Hoeven’s top campaign consultants. Hoeven’s campaign has paid Odney more than $35,000 this year and more than $2 million since his first Senate run in 2010. Odney has also produced print and television ads for First Western.
A key to Hoeven’s office?
Odney also lobbies at the federal level, and their filings—plus their close connections to the senator—suggest Odney may be targeting Hoeven for influence. Though lobbying firms don’t have to disclose which officials they lobbied on their quarterly filings, they do have to report which executive agencies and houses of Congress they targeted. Odney’s lobbying activity has skewed heavily towards the Senate. They’ve reported lobbying the Senate during every quarter that they’ve lobbied, and in more than half of those cases, the Senate is the only part of the government where they made lobbying contacts.
The firm’s particular advocacy activity on behalf of individual clients gives the same impression. For example, in 2018, Goettle and Larson lobbied the Senate to keep the agriculture appropriations bill “free of riders” during the same quarter that it was introduced by Hoeven. In another instance, for the single quarter that Odney lobbied on behalf of Genting Management Services, they planned to lobby on a bill that was in a committee that Hoeven chaired. Two of the five clients that have enlisted the firm’s services have had in-person meetings with Hoeven, according to pictures that were posted on his Senate website.
The scope of the apparent overlap between Hoeven’s legislative responsibilities and personal financial interests is unusual, and concerning. So is Odney’s mixed role in Hoeven’s political and business worlds.
The apparent conflict of interest goes to the need to reform congressional personal financial issues. Sen. Elizabeth Warren and Rep. Pramila Jayapal have introduced legislation that would prohibit members of the House from serving on corporate boards. That should be passed, and the existing Senate rule should be enforced. The only bills members of Congress should be concerned with making are the legislative ones.
Legal and research intern Maria Letunić and research intern Alyssa Meiman both contributed to this report.