The Oldest Transaction

I have been thinking lately about the oldest transaction in the world. Not the buying and selling of things you can hold in your hand, but the other kind. The kind where one person has something another person wants, and the second person has something the first person wants, and they both know it, and they find a quiet room somewhere and work out the arithmetic. This is not a new invention. I suspect it predates agriculture. I suspect it predates language. Two cavepeople figured out the arrangement before they had words for it, and one of them was probably disappointed in the other's honesty even then.

It works differently depending on the scale.

In Chamberlain's Bend, the transaction is open and honest because it has to be. When Big Earl needs his driveway plowed in January, he doesn't call a contractor. He calls Pastor Holmgren, whose snowblower is bigger than his theology, and Holmgren comes over and does the job, and then in July Earl shows up at the church social with a bushel of sweet corn and nobody says a word about it because everybody already knows. The favor economy. It runs on the understanding that you will be seen. That your name is attached to what you do. That Holmgren will mention, from the pulpit, in a roundabout way, that Earl's corn was a touch late this year, and Earl will know exactly what he means.

Now. What happens when the quiet room is a private dining space at Charlie Palmer Steak in Washington, and the two parties are a United States Senator and a defense contractor from Hawaii? The contractor, Martin Kao, had already handed an envelope of checks to a man he described to the FBI as "the money man." In Chamberlain's Bend, that phrase would only mean Doug Kettunen, who collects the offering at Zion Lutheran and has been known to shortchange the count by a twenty when nobody's looking. But in Washington, the money man is a professional. He takes the envelope and leaves before the senator arrives, because the senator's time runs $40,000 for 45 minutes, and you do not waste that with pleasantries.

Kao knew this. The day before the dinner, he wrote to his people that Senator Lindsey Graham just had to "stop by and say 'yes.'" He added, in an email that ProPublica obtained, "We don't need to pretend we give a shit about each other." I have sat through some uncomfortable church council meetings. I have watched grown men argue about whether the hymnal budget comes from the general fund or the memorial fund. But I have never heard anyone be that honest about a transaction with a sitting senator. That is the kind of honesty that only comes from knowing you are both doing something you shouldn't, and neither of you cares enough to dress it up.

Graham said yes. He would steer $10 million in government contracts to Kao's company, Navatek. Kao would pledge $100,000 to Graham's reelection campaign. And it wasn't the only arrangement. Kao told the FBI he had similar deals with James Clyburn, the most powerful Democrat in South Carolina, and Joe Wilson, a Republican with pull on the Armed Services Committee. Each wanted $100,000. Each got something in return.

Here is the part that would make Aunt Vi spit out her coffee. The cutting-edge naval technology Navatek was pitching, the stuff Graham's office said would "ensure that our fleet is ready for the fights of the future," was, in the estimation of a former Navatek executive, something you could source from RadioShack. A college senior's graduation project. The company had, by Kao's own telling from his prison cell, "zero people" capable of doing the work. The whole thing was, his words, "a grand lie."

In Chamberlain's Bend, if you sold the county a bridge repair and the bridge fell down, you could not show your face at the grain elevator for a decade. Big Earl would make sure of it. There is a real cost to being caught short when everyone you know is watching. But Navatek was operating in a world where the watchers are very far away, and the folks writing the checks are the same folks getting the envelopes.

The FBI figured it out. Two agents built the case. They had Kao's confession, his spreadsheets, his emails. They were preparing to go further, possibly to the lawmakers themselves. And then the administration came back into office and dismantled the FBI's anti-corruption unit and the Justice Department's public integrity section. The agents were fired. The prosecutor quit. The case went dark.

Kao is in federal prison in South Dakota. He is the only one there. Graham died earlier this year. His sister took the seat and kept his staff, including the national security adviser who helped steer the Navy contract to Navatek. The two executives the FBI had named as subjects of the bribery investigation, Duke Hartman and Joshua Knight, started a new company called Integer Technologies, picked up the very contract Graham arranged over that cold steak dinner, and are now projecting revenues of $375 million by 2030. Hartman recently posted a photo with the Speaker of the House on LinkedIn. He thanked his lobbyist for the introduction.

I keep coming back to something Kao wrote in a memo the FBI found. "We became clever in our own right and figured out how to dangle the carrot," he said, "until we saw some assurance that the Ask was in the budget." The capital A is his. A kind of reverence for the thing being requested, as though the money were a deity and the budget a prayer.

In Chamberlain's Bend, the favor economy survives because you cannot outrun your own reputation. You will see Holmgren on Sunday. You will see Earl on Monday. The price of cheating is not prison. It is living the rest of your life inside the consequence. That is a powerful thing. It was never going to travel.

The money man took the envelope and left before the senator arrived. That is the whole story, really. The money comes first. The senator walks in after. The food gets cold. And nobody pretends to give a damn about each other.

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