A few days ago I slammed Democrats for hypocritically exempting American Samoa from the new minimum wage law. In passing, I noted that one of the beneficiaries of low wages on the island is Starkist, a subsidiary of Del Monte, which is based in Nancy Pelosi's San Francisco district.
Partisans have now taken that basic data and run with it, providing a fascinating look at how a scandal can be ginned up out of, literally, nothing.
It started on Jan. 12, when somebody modified the Wikipedia entry on Del Monte to add a sentence claiming that Pelosi's husband, Paul, owns $17 million worth of Del Monte shares — suggesting, of course, that personal financial interest drove the Samoan exception. The right-wing site Newsbusters picked it up that same day, and it started spreading through the right-wing blogosphere. It gained momentum on Jan. 15, with an unsourced allegation by Rush Limbaugh. Along with the buzz came the usual smug and knowing comments of "I wonder why the mainstream media is ignoring this?"
Perhaps because it isn't true. Setting aside the wisdom of relying entirely on an unsourced Wikipedia edit, Wikipedia erased the edit a few hours after it was posted on Jan. 12.
Then the story morphed to say Pelosi owned $17 million of Heinz stock, and since Heinz owns 75 percent of Del Monte, the Pelosis still have a substantial financial interest.
First, consider that Heinz has 332 million shares outstanding, at a current stock price of $46.56, for a total market cap of about $15.5 billion.
So if Paul Pelosi actually does own $17 million worth of Heinz stock, that means he owns approximately 0.1 percent of the outstanding shares.
Further, this accusation appears to represent a misunderstanding of who owns what. The Del Monte transaction was completed in 2002. But it was Heinz shareholders received shares of the new Del Monte based on their share of ownership in Heinz. Thus Heinz shareholders — not Heinz itself — owned 75 percent of Del Monte as of 2002, through separate, non-Heinz stock. Heinz the company has no ongoing interest in Del Monte.
So assuming Pelosi owned 0.1 percent of Heinz in 2002, he would have received a 0.1 percent share of the 75 percent of Del Monte owned by Heinz shareholders. Del Monte is much smaller than Heinz — $3 billion in annual sales, market value of $2.2 billion. So Paul Pelosi's share of Del Monte would be worth about $1.6 million.
Then consider that Starkist represents just part of Del Monte's portfolio, generating annual sales of about $565 million (you'll have to get the 2005 Del Monte annual report and turn to page 54 to verify this). That's 18.8 percent of Del Monte. So Pelosi's direct interest in Starkist would be about $300,000.
But that all assumes Pelosi owns $17 million of stock somewhere. And he doesn't. If you check out the Pelosi's financial disclosure statement for 2005 (click on the link under Nancy's picture), you discover that not only do they not own any stock in Del Monte or Heinz, but they have only one asset worth anywhere near $17 million — a vineyard valued at between $5 million and $25 million.
So to sum up: the right-wing blogosphere, up to and including the venerable Rush, fell for and helped spread a completely false slander about the Pelosis — even though rudimentary logic and standards of evidence should have set off alarm bells, and a few basic fact checks could have shown the whole thing to be bunk.
To their credit, Newsbusters and a few other sites were quick to post updates that at least partially backed away from their initial claims. But Rush remains unrepentant, and the goofballs over at Free Republic took it on faith, as did Red State News and Right Wing News — even three days after the fact.