McCain's wealth difficult to track

PHOENIX — John McCain is one of the richest members of the Senate. Yet barely a sliver of it is in his name.

When he is in Washington, he lives in a luxury high-rise condominium in Arlington, Va., owned by his wife, Cindy Hensley McCain. Cindy McCain also owns their condos in Phoenix, San Diego and Coronado, Calif., and their vacation compound near Sedona, Ariz. The beer business she inherited from her father — Hensley & Co. — is the source of the McCain family fortune.

Democrats increasingly have highlighted McCain's wealth: Sen. Barack Obama ridiculed him Thursday for being unable to say how many homes he owned, saying it showed McCain was out of touch with ordinary Americans.

But with the family's money in Cindy McCain's name, as dictated by a prenuptial agreement, the senator's finances are more difficult to assess and scrutinize than those of many other political candidates.

Husbands and wives of senators are subject to fewer disclosure requirements than their office-holding spouses. Cindy McCain, who files separate tax returns from her husband, also controls a privately held company and invests mainly through a web of limited-liability corporations and trusts that have few disclosure requirements.

She declined to be interviewed.

"Cindy is a private person, and I think in many ways that defines her," said Robert Delgado, her father's successor as chief executive of Hensley & Co., who spoke at the McCain campaign's behest.

But the Hensley family wealth also is the fortune that propelled John McCain into national politics. A clearer picture of that fortune emerges from a review of public records and interviews.

Hensley & Co. has grown from a tiny operation in the 1950s to the dominant beer wholesaler in Arizona and the third-largest Budweiser distributor in the country, with more than $300 million in annual sales.

It plays a leading role in corporate Phoenix — Andy McCain, the senator's stepson from his first marriage and a top executive of the beer company, is president of the city's Chamber of Commerce — and is a forceful presence in state politics on the issues that matter to it.

By all accounts, Cindy McCain is not a forceful presence at the company, where she is the chairwoman.

She crisscrosses the country on the company jet, keeps an accountant on the company payroll to mind her personal finances, drives a company Lexus with "MS BUD" plates, and said she oversees the company's "strategic planning and corporate vision." Yet she rarely shows up in the office, is deemed an absentee owner by Anheuser-Busch and has left scarcely a mark on the company, present and former executives say.

Anheuser-Busch documents suggest Cindy McCain's ownership of Hensley & Co. also could create an unusual circumstance.

The brewer's contracts with wholesalers require that absentee owners supervise their managers, attend meetings and make timely decisions, meaning that the business would be overseen by the first lady. If she chose to withdraw from ownership, Anheuser-Busch would have the right to approve whoever bought her shares, or to make an offer to buy them itself.

Colorful inheritance

He was a young husband and father before he went off to war. Wounded in combat, he returned home a hero, but stunned his wife by divorcing her to marry another woman. The warrior in this case was not Cindy McCain's husband, but her father, James Hensley.

Jim Hensley's first marriage was to his Phoenix high-school sweetheart, Mary Jeanne Parks. Family lore says he was treading water in the English Channel, after his B-17 was shot down, when his daughter, Kathleen Anne Hensley, was born in February 1943.

The marriage ended there, according to that daughter, now Kathleen Portalski. Recuperating far from home, he fell in love with Marguerite Smith, a Tennessee woman with a 10-year-old daughter. By March 1945, he was divorced and they married.

Back in Phoenix, he and his brother, Eugene, went into the liquor business with Kemper Marley, who had cornered much of the Arizona market after Prohibition ended.

In March 1948, a federal jury convicted both Hensleys of concealing sales of black-market liquor. Jim Hensley's six-month sentence was suspended. A second indictment, in 1953 for falsifying records to evade taxes, was dismissed.

The Hensleys bought a New Mexico horse track in 1952. Eugene Hensley's role at the track led to lawsuits, tax-evasion charges and prison. In 1969, he sold out to a mob-connected company with close ties to Marley, according to published reports. (The Phoenix police named Marley as the man they believed ordered the 1976 assassination of Don Bolles, an investigative reporter for The Arizona Republic. Marley, who died in 1990, never was charged.)

Jim Hensley sold his stake in the track in 1955 and took a job at a beer wholesaler. After buying the business in 1959, he got a federal wholesaler's permit as Hensley & Co.

Selling Bud in steel cans and Michelob draft, Hensley & Co. started out with only a 6 percent market share. But Jim Hensley, bent on building the "Cadillac of beer companies," began luring workers with generous pay and benefits.

Few big cities have only one Budweiser wholesaler, but Phoenix had only 107,000 residents in 1950. Ten years later, the city's population had quadrupled. Hensley's market share catapulted to 50 percent in 1987, from 20 percent in 1970; today it owns nearly two-thirds of the market.

Those who knew Jim Hensley, who died at 80 in June 2000, invariably sing his praises. If he had one flaw, they said, it was being unable to say no to his wife or their daughter, Cindy Lou, born in 1954.

Addiction to painkillers

Her father's death left Cindy McCain with full control over his company, although she has seldom intervened, executives said. "She's never been a day-to-day manager in this business," said Delgado, the chief executive.

In the late 1980s, she set up a charitable organization out of Hensley headquarters, distributing medical supplies in Third World countries. But she disbanded the group in the early 1990s after she became addicted to painkillers and was caught stealing from its supply of drugs.

Since then, her parking space has seldom been occupied. In fact, Anheuser-Busch treats her as an absentee owner, requiring Delgado to have total control over business operations and capital investments.

Delgado confirmed that after Jim Hensley died, Anheuser-Busch approached Cindy McCain about buying the distributorship. But he said she decided she wanted to be the steward of her father's legacy.

Others who have seen the company's books gave another reason: The company is handsomely profitable. She owns a controlling 34 percent share of a company with net profits estimated at more than $5 million a year. In addition, Meghan, Jack and James, the biological children of John and Cindy McCain, each have 7.73 percent of Hensley & Co. Andy McCain, 45, the senator's stepson, has 6.8 percent. Bridget McCain, the McCains' adopted daughter, has shares worth 3.4 percent. (A McCain campaign spokeswoman said Bridget's stake eventually would equal her siblings'.)

Delgado declined to discuss equity stakes or distribution of profits and said Cindy McCain spoke to him a few times a week, often about personal financial issues. He said she took an interest in Hensley's charitable giving and in "things that could affect the company's existence."

Another person knowledgeable about the company's finances said Cindy McCain's involvement in Hensley was more limited. "Delgado will tell her how much money they made, so she can tell him how much she'll take out," this person said. As controlling owner, Cindy McCain distributes profits to all the shareholders whenever she sees fit.

A diversified portfolio

How much Cindy McCain receives in profits is not a matter of public record. Distributions to other shareholders, who discussed them only anonymously, suggest she receives hundreds of thousands of dollars several times a year. Cindy McCain has released only a two-page Form 1040 from her 2006 return. It listed $4.5 million in income from S corporations (such as Hensley), partnerships, rental real estate and other categories; capital gains of $743,000; and dividends of $283,000. John McCain's tax returns show that his wife received a salary from Hensley of more than $430,000 each of the past two years. (John McCain listed $361,373 of his income in 2007.)

Senate rules do not require spouses to specify the values of assets or income sources exceeding $1 million, and Cindy McCain has many of them, including shares in Anheuser-Busch, which at a minimum are worth $2.7 million.

Cindy McCain also has invested in banks, including one founded by Valley National Bank, where her father got his first business loan.

Far more of Cindy McCain's money is invested in real estate. With Sharon Harper, a close friend and developer, Cindy McCain has stakes in three office complexes.

Cindy McCain owns 10 homes, including rental properties.

There are the condominium in the Crystal City section of Arlington; two in an oceanfront tower in Coronado; her father's condo in the La Jolla section of San Diego; a $4.7 million condo atop one of Phoenix's newest luxury towers; another unit on its fourth floor; and a $700,000 town house nearby.

Then there are Cindy McCain's vacation homes outside Sedona. In 1985, a Hensley entity bought the first, in a secluded enclave along Oak Creek, down a steep road from the plateau of Coconino National Forest. In 1996, Cindy McCain bought an adjacent home for $750,000.

The booming Hensley business financed John McCain's entry into politics: after marrying Cindy, he retired from the Navy in 1981 and planned a run for Congress the next year. To that end, he took a public-relations job at Hensley and began introducing himself to voters. His father-in-law's wealth — Cindy McCain was given $639,000 by a Hensley affiliate in 1982 — also enabled John McCain to lend his campaign $167,000.

Today, Hensley & Co. is a major donor to Arizona politicians and above all has fought increases in the state excise tax, now about 1.5 cents a beer. The tax has risen only three times since the repeal of Prohibition, last in 1984, and remains 16 percent below the national median.