May 22, 2013
Citadel LLC founder Kenneth Griffin named and shamed local corporations that have taken tax incentives from the financially strapped state in a speech to a prominent Chicago business group.
"The last election cycle I called a local CEO to talk to him about supporting a pro-business candidate …," Griffin, a billionaire hedge fund manager and Republican, told the Economic Club of Chicago. "And I asked straightforward and simple, and he said, 'No. No. I'm not going to write a check. You see, if Illinois is not hospitable to my business, we're just going to move.'
"And then I learned what the word 'hospitable' meant. For, a few weeks later, it was announced that his company received tens of millions of dollars in tax incentives. His silence was bought and paid for."
Griffin said the story was "sadly" not unique. Citing Chicago Tribune reporting, Griffin put the logos of Illinois businesses that had accepted tax incentives on a large screen behind him. A few people in the crowd at the Palmer House Hilton began to applaud, but most were shocked as the names of corporations, either their own or those run by friends in the audience, appeared on screen.
"What is the cost of this cronyism?" Griffin asked, as the names scrolled. "It is far higher than the lost tax revenue. It is the devastating loss of leadership from our business community."
Griffin and his wife, Anne Dias Griffin, are two of the largest financial backers of the Illinois Republican Party. But Griffin supported Barack Obama's first presidential campaign, only to sour on him. Griffin and his wife each gave $100,000 to Rahm Emanuel's mayoral campaign in 2011. He also appeared on recent ethics disclosures as providing the mayor with free transportation in the last year.
Still, he didn't hold back, saying Emanuel's record so far was "lackluster." He criticized the mayor for agreeing to hire additional teachers in exchange for a longer school day. He also said Emanuel should be closing more than 100 schools rather than the 53 elementary schools and one high school program currently proposed.
That was the most unpopular remark of the night.
"Every alderman in our city is a Democrat," Griffin said. "Our mayor is a Democrat. Our governor is a Democrat. Our (state) House is a supermajority of Democrats. Our (state) Senate is a majority of Democrats. And the president of the United States is a Democrat. What is so politically hard when you control the entire political process from front to back? What is politically hard is that the Democratic Party is captive to the unions. They're not captive to the children."
Bill Daley, Obama's former chief of staff who has floated the possibility of a run for governor, described Griffin's remarks as "shocking" because of the venue, not the content.
"It was the most partisan speech I have ever heard at the Economic Club," Daley said. "And I've heard 'em all — Richard Nixon, Hillary Clinton, Al Gore."
He said Griffin sounded like a "liberal Democrat" during his rant against corporate tax incentives and "like every Republican" when he blamed the teachers union for "all of the evils of education."
"What he seemed to miss is that this is a democracy; the people who are in the system have to compromise to move the ball forward," Daley said. "They can't just wave a wand."
Griffin, 44, opened his speech on a light note with a photo of him sitting on a beach as a young boy reading the business section of a newspaper. He also showed a photo of a report he wrote in the sixth grade, in which he set out to understand the stock market. He started his first trading operation by installing a satellite dish on the roof of his Harvard dorm.
He also talked about strategies that helped him grow Citadel, and emphasized hiring top talent. After one company shut down its energy-trading operation, Griffin said he paid a few million dollars to be able to interview all 600 people on that team.
Griffin said "the greatest mistake" of his career was not foreseeing the financial crisis. He said every bank would have failed had the government not intervened.
"We were losing hundreds of millions of dollars a week, if not more," Griffin said. "CNBC parked a van in front of Citadel waiting to break the story of our demise. … We sold assets. We closed business lines. We let people go. We suspended redemptions. Our management team absorbed $500 million in costs on behalf of our investors, to demonstrate our commitment to the business and our belief in the future. And each day we bought one more day. And day by day, we bought ourselves a future."
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