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 TIME CNN/AllPolitics CNN/AllPolitics with Congressional Quarterly

The fruit of its labor

How a company that exports jobs pushes for a Capitol Hill handout

By ADAM ZAGORIN/WASHINGTON

TIME magazine

November 1, 1999
Web posted at: 12:10 p.m. EST (1710 GMT)

If you are an underwear mogul, you surely cannot lack confidence. So it is with Bill Farley. The handsome physical-fitness buff has under his belt brands like BVD, Munsingwear and his flagship, Fruit of the Loom. He rubs shoulders with the rich and powerful, and recently co-chaired a lunch that raised more than $500,000 for George W. Bush. Muscles rippling, Farley, 57, has also shown up wearing a tank top in Fruit of the Loom advertising. He once even put himself forward as a candidate for President of the United States.

These days, however, Farley's political focus is squarely on Congress, where Fruit's adventures in lobbying offer a choice example of how the game is played. Fruit of the Loom is a tattered company, suffering from bad performance and poor management and lobbying heavily for a bill that would ripen its bottom line.

How likely is it that the company's case will be heard on the Hill? Well, last year alone Fruit handed out more than $435,000 in soft-money donations, a figure that puts contributions by the firm (1998 sales: $2.2 billion) ahead of those of such giants as Coca-Cola, Exxon and Bank of America. Most of Fruit's plums go to Republicans, including $265,000 to the National Republican Senatorial Committee, run by Kentucky Senator Mitch McConnell, the principal opponent of campaign finance reform.

This week, with Congress having for now killed campaign finance reform, McConnell and other Republicans will get on with other business, such as an amendment to an African trade bill that would allow apparel produced in the Caribbean Basin to enter the U.S. duty free, provided it is assembled from U.S. fabric.

Fruit's lobbyists--along with those from competitors like the Sara Lee Corp., which makes Hanes underwear, and retailers like the Limited and the Gap--are pushing hard for passage. Fruit officials claim the measure, which Bill Clinton supports, will create jobs, and deny that the company's donations can buy influence. Says Ron Sorini, a Fruit lobbyist: "There's absolutely no correlation between our soft-money donations and those who decide to vote in favor of this bill."

Whether there is or not, Farley's much coveted tariff break comes at a cost. Eliminating duties on apparel from the Caribbean will run U.S. taxpayers at least $1 billion in lost revenue over five years--a figure that, by congressional rules, must be made up with cuts in other programs.

Fruit confirms that the bill is expected to deliver a quick $25 million to $50 million to the bottom line, adding to savings achieved after moving some 17,000 of its U.S.-based jobs, mostly to the low-wage Caribbean Basin, and reincorporating in the tax haven Cayman Islands. The job cuts were spread across the South, especially Kentucky, where earlier in this decade Fruit was one of the largest employers. "They are trying to win in Washington what they've been unable to achieve in the marketplace," says Charles Lewis, executive director of the Center for Public Integrity, a watchdog group. "They're now trying to secure advantages from Congress at a time when they're in dire financial straits."

Dire is right. After a major inventory snafu, Fruit's financial elastic stretched again last month, when it had to make a $45 million interest payment on accumulated debt of $1.3 billion. Its stock, traded at $48 a few years ago, now sells for less than $4. The board, its confidence in Farley shaken, managed to shunt him into the role of nonexecutive chairman in August, and the company is searching for a new CEO. Farley retains a role in large measure because he still controls 28.5% of Fruit's voting shares. He has also arranged for the company to guarantee loans to himself worth $65 million.

Fruit of the Loom's favorite trade bill has led to a rare split between Kentucky's two conservative Republican Senators. While McConnell is expected to support the tariff cut, his colleague Jim Bunning has no intention of backing the measure. Asks Bunning: "How many more jobs do we have to lose until we wake up and smell the Caribbean coffee?"

Yet for Bill Farley, the aroma is nothing if not enticing. By one count, he's tried to get versions of the bill through Congress six times in recent years. Perhaps seven's the charm.


MORE TIME STORIES:

Cover Date: November 1, 1999






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