Palm Beach Post Staff Writer
Saturday, June 28, 2008
Standing on his skiff, hedge fund billionaire Paul Tudor Jones II grew more confident with each cast into the salty shallows of Florida Bay - snook or no snook.His goal was more ambitious than catching a few fish. He hoped to persuade Florida's newly elected governor, Charlie Crist, to loosen Big Sugar's grip on the agency charged with restoring Florida's Everglades, the South Florida Water Management District.
Success would be like catching a 16-pound bonefish, something huge, and maddeningly elusive under Gov. Jeb Bush. It would mean real progress toward Everglades restoration. Progress toward a clean and healthy Florida Bay.
No other governor, not even Big-Tobacco-slaying Democrat Lawton Chiles, had been willing to tackle sugar in hand-to-hand combat. Fighting sugar head-on was political suicide. Yet surrounded by sparkling water and mangrove flats in February 2007, Crist was receptive.
For more than 30 years, the environmental aristocrats who bankrolled state advocacy groups have sounded the same theme: Return farmland to wetlands, so that water can flow like a sheet from Lake Okeechobee to the Everglades, and finally into Florida Bay, the way nature intended.
Yet farm interests stood in the way, and in Florida government, they have remained as fixed as the horizon. In nearly 10 years, the plan to restore the Everglades had never broached a Big-Sugar buyout. All the more reason that jaws dropped when Crist last week stood side-by-side with the U.S. Sugar CEO Robert Buker, announcing the largest conservation land deal in the history of Florida, a $1.75 billion plan to buy the 80-year-old company's assets.
How that moment came to be has been a mystery to many, from sugar industry watchers to political insiders. Crist has long had an interest in the Everglades and has assembled a staff with similar interests. But the large and complex deal also bears the imprint of Jones, a top Wall Street expert in commodities markets and a passionate conservationist who owns a vacation home in Islamorada.
Jones, traveling in Africa, did not respond to e-mailed questions about his role. But his colleagues and advisers to Crist acknowledge a relationship has developed between the two, one so close that Jones reportedly knew of Sugar's openness to sell its assets in November, several months before the executive director of the South Florida Water Management District or even Florida Secretary of Environmental Protection Mike Sole.
Crist's chief of staff, Eric Eikenberg, acknowledged the fishing trips and phone calls Crist and Jones have shared.
"There is a relationship there that has been formed out of respect," said Eikenberg. "They've had multiple conversations since the governor took office."
Crist is a Republican, and Jones is a top fund-raiser for Barack Obama, a Democrat. Still, the longtime politician and the liberal billionaire have much in common. Both found their environmental epiphany at the end of a fishing pole. Fish don't like dirty water.
And both had crossed Big Sugar before. Jones had seen Crist willing to vote against the sugar lobby 12 years earlier, back when both men supported a penny-a-pound sugar tax to pay for pollution clean-up. Jones had bankrolled the sugar-tax campaign with an $11 million investment. His devotion to that cause provoked U.S. Sugar's Buker to tell The Miami Herald in 1996 that Jones was "a cockroach."
"You shine a light on him and he runs away," Buker said then.
The sugar tax try failed.
Tide turns for industry
In the intervening years, both Crist and Jones grew more powerful. Jones ascended from commodities trader to Wall Street wizard, becoming one of the wealthiest men in the world according to Forbes, zipping in and out of about 30 commodities markets and assembling companies, one of which manages an estimated $20 billion in assets. Colleagues say he hasn't traded in sugar in 15 years, and they insist he does not have any financial interest in the debt the state plans to issue for the purchase.
The 53-year-old father of four has been as devoted to his family, his recreation and his philanthropies as he is his hedge funds. Married to Australian model Sonja, Jones founded New York's poverty-fighting Robin Hood Foundation, and he helped found Miami's Everglades Foundation, devoted to restoring the environment.
Jones, who was born in Memphis, is an avid hunter and fisherman.
In Greenwich, Conn., he's known for decorating his waterfront mansion at Christmastime in such an elaborate manner that he must hire off-duty police to manage the traffic.
In Islamorada, he's known for his ownership of the Coral Bowl, a local bowling alley that he saved from closure for his children and their friends in 2000.
Jones got his start trading cotton and earned a reputation as a hedge fund genius at a young age after predicting the stock market crash of 1987. His environmental awakening came through his Islamorada neighbor, the late George Barley, who was his frequent fishing companion. Active in politics, he hedges his donations the same way he does his investments, becoming one of Obama's top fund-raisers even as he gave the maximum to Rudolph Giuliani and Mitt Romney.
Crist, meanwhile, skipped like a stone from law-and-order legislator to attorney general to green governor, thanks in part, to the half-million worth of Jones' checks to the state Republican Party.
Sugar's star had not risen so high. By last summer, the sugar industry found itself facing unprecedented challenges. Free trade pressures in Washington threatened its long-protected federal subsidies. The black-gold muck that nourished its cane would not last forever, but there was a backup plan to build hundreds of thousands of homes in Palm Beach County's Everglades Agricultural Area. The real estate downturn threatened that plan.
Meanwhile, the company was fighting a bitter and costly lawsuit from its employee-shareholders. They had learned that the company's board, dominated by descendants of Charles Stewart Mott, had nixed an offer that would have given them nearly $100 a share more than U.S. Sugar told them their shares were worth.
Amid this, a drought and a newly environmentally sensitive water district board was, U.S. Sugar felt, threatening the dependability of its water supply.
Two months after his Florida Bay fishing trip with Jones, Crist had made two key appointments to the water district board: Miami attorney Eric Buermann was a former general counsel to the Bush-Cheney campaign, but he also carried pro-environment credentials such as a membership in the Theodore Roosevelt Society. Shannon Estenoz, a civil engineer, was a leading Everglades advocate.
Environmental leaders were thrilled with Estenoz and cautiously optimistic about Buermann. The sugar industry was less pleased, particularly with Estenoz.
Buermann became chairman of the governing board, with Estenoz as vice chair.
And things changed. There was a time when the water district could be counted on to allow farmers to recycle their polluted runoff into Lake Okeechobee when necessary. But when the historically low lake levels struck last summer, Crist's appointees led the charge in voting against such backpumping. It made no sense to allow pollution of the waterways when they were spending billions to restore and clean them, they said.
"It was the first time they had lost in the 20 years I've been around," said Tallahassee lawyer and environmental advocate Thom Rumberger. "They got slapped in the face."
U.S. Sugar's Robert Coker asked Crist for a meeting. In November, Coker sent two lobbyists, Brian Ballard and Mac Stipanovich, to "help him better understand our perspective," Coker said, to see that he was "sensitive to our need for sustainability."
They discussed backpumping, lake levels, court-ordered pollution controls. Crist ended the meeting by shocking the lobbyists.
"What the governor said was, 'There are a lot of complex matters. Maybe what we ought to do is just buy U.S. Sugar out,' " Coker said.
Ballard and Stipanovich took the proposal back to Coker.
"I was very stunned. That was not the expectation we had for that meeting. What we hoped to get out of that meeting was a commitment to work on issues in a cooperative way," he said.
And yet when the proposals went back to U.S. Sugar's board, it was not rejected.
"When you own something and build something for 80 years, you develop an emotional attachment to the business and to the land. The descendants of Charles Stewart Mott, who make up the majority of our board, have had offers in the past for all or parts of our company and our land. They never felt it met their criteria," he said.
But Crist's offer had their attention.
"We believe that our company and our board and our shareholders have gotten two things. We've gotten reasonable fair value - not what we thought we could have gotten," Coker said. "And at the same time, they know these lands are going to be used to ensure the future of the Florida Everglades. I think that's a legacy they were comfortable with."
At Crist's announcement, a day on which God, Teddy Roosevelt and the Louisiana Purchase were invoked, Coker found himself shaking hands with George Barley's widow, Mary, co-founder with Jones of the Everglades Foundation.
It was a strange moment. Coker and Barley had been bitter political opponents for decades.
Coker said Crist brought fresh faces to the issue. Diana Sawaya-Crane had worked for Crist when he was attorney general. He made her a cabinet aide and designated her an environmental adviser. Eikenberg, a former aide to former U.S. Rep. E. Clay Shaw, had worked on Everglades funding in Washington.
Looking for the big 'wow'
Meanwhile, Michael Sole, Crist's new environmental protection secretary, had regulated pollution and other matters in 17 years with the agency. Sole had experience organizing state deals to buy and preserve large tracts of land, including the Babcock Ranch Preserve.
In February, Crist asked all of them to work on assessing the feasibility and desirability of acquiring U.S. Sugar's land.
"Every day, the concept became more and more, 'Not only is this viable, but, wow, this is the right thing to do for Everglades restoration,' " Sole said.
A year earlier, Sole and Eikenberg had sat in a briefing on Everglades restoration, looking at a map with more than 200 small and complex projects needed to store dirty farm water and runoff, clean it, and enable it to flow when needed into the Everglades.
Looking at the map, Eikenberg said he could only shake his head at the complexity and expense. Water district Executive Director Carol Wehle recalls how Eikenberg ended that initial meeting.
"He said, 'This is messy and it's complicated, and it's a lot of little projects. Isn't there some big wow that would move a lot of this forward?' " Wehle recalled.
Buying U.S. Sugar didn't even enter her mind. It was never on the table. Eikenberg and Sole said they didn't raise the possibility, either.
"It never would have occurred to me to say, 'Hey, what if we bought out U.S. Sugar,' " Wehle said.
That the day had come was as amazing to Wehle as it was to Eikenberg, Sole and even U.S. Sugar's Buker, who had fought the environmentalists so hard, for so long.
Asked what had transpired in 10 years of Everglades restoration to make U.S. Sugar suddenly receptive to selling its assets, Buker, put it simply: "What changed in 10 years ago from now is the people have changed."
From Staff and Wire Reports