[Senate Report 105-167]
[From the U.S. Government Publishing Office]
105th Congress Rept. 105-167
SENATE
2d Session Vol. 6
_______________________________________________________________________
INVESTIGATION OF ILLEGAL OF IMPROPER ACTIVITIES IN CONNECTION
WITH 1996 FEDERAL ELECTION CAMPAIGNS
__________
FINAL REPORT
of the
COMMITTEE ON GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
together with
ADDITIONAL AND MINORITY VIEWS
Volume 6 of 6
March 10, 1998.--Ordered to be printed
INVESTIGATION OF ILLEGAL OR IMPROPER ACTIVITIES IN CONNECTION WITH 1996
FEDERAL ELECTION CAMPAIGNS--VOLUME 6
105th Congress Rept. 105-167
SENATE
2d Session Vol. 6
_______________________________________________________________________
INVESTIGATION OF ILLEGAL OR
IMPROPER ACTIVITIES IN CONNECTION
WITH 1996 FEDERAL ELECTION
CAMPAIGNS
__________
FINAL REPORT
of the
COMMITTEE ON GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
together with
ADDITIONAL AND MINORITY VIEWS
Volume 6 of 6
March 10, 1998.--Ordered to be printed
COMMITTEE ON GOVERNMENTAL AFFAIRS
FRED THOMPSON, Tennessee, Chairman
SUSAN COLLINS, Maine JOHN GLENN, Ohio
SAM BROWNBACK, Kansas CARL LEVIN, Michigan
PETE V. DOMENICI, New Mexico JOSEPH I. LIEBERMAN, Connecticut
THAD COCHRAN, Mississippi DANIEL K. AKAKA, Hawaii
DON NICKLES, Oklahoma RICHARD J. DURBIN, Illinois
ARLEN SPECTER, Pennsylvania ROBERT G. TORRICELLI, New Jersey
BOB SMITH, New Hampshire MAX CLELAND, Georgia
ROBERT F. BENNETT, Utah
Hannah S. Sistare, Staff Director and Chief Counsel
Leonard Weiss, Minority Staff Director
Lynn L. Baker, Chief Clerk
------
MAJORITY STAFF
Michael J. Madigan, Chief Counsel
J. Mark Tipps, Deputy Chief Counsel
Donald T. Bucklin, Senior Counsel
Harold Damelin, Senior Counsel
Harry S. Mattice, Jr., Senior Counsel
John H. Cobb, Staff Director/Counsel
K. Lee Blalack, Counsel
Michael Bopp, Counsel
James A. Brown, Counsel
Brian Connelly, Counsel
Christopher Ford, Counsel
Allison Hayward, Counsel
Matthew Herrington, Counsel
Margaret Hickey, Counsel
Dave Kully, Counsel
Jeffrey Kupfer, Counsel
John Loesch, Counsel
William ``Bill'' Outhier, Counsel
Glynna Parde, Counsel
Phil Perry, Counsel
Gus Puryear, Counsel
Mary Kathryn (``Katie'') Quinn, Counsel
Paul Robinson, Counsel
John S. Shaw, Counsel
David Hickey, Investigator
Stephen J. Scott, Investigator
Matthew Tallmer, Investigator
Darla Cassell, Office Manager
Mary D. Robertson, Office Manager
Kenneth Feng, GAO Detailee
Mark Kallal, Legal Assistant
John W. M. Claud, Legal Assistant
Mike Marshall, Legal Assistant
Michael Tavernier, Legal Assistant
Michael Vahle, Legal Assistant
Amy Alderson, Staff Assistant
Kim Bejeck, Executive Assistant
Deborah Collier, Executive Assistant
Daniel Donovan, Staff Assistant
Leanne Durm, Staff Assistant
Michele Espinoza, Executive Assistant
Cheryl Ethridge-Morton, Executive Assistant
Heather Freeman, Staff Assistant
John Gilboy, Staff Assistant
Janat Montag, Executive Assistant
Kathryn O'Connor, Executive Assistant
Wayne Parris, Staff Assistant
Jason Parrott, Staff Assistant
Sahand Sarshar, Staff Assistant
Jerome Sikorski, Archivist
Loesje Troglia, Executive Assistant
Sandra Wiseman, Executive Assistant
GOVERNMENT AFFAIRS COMMITTEE STAFF
Frederick S. Ansell, Chief Counsel
Richard A. Hertling, Senior Counsel
Curtis M. Silvers, Professional Staff Member
Paul S. Clark, Communications Director
Michal S. Prosser, Chief Clerk
Matthew Peterson, Assistant Clerk
Christopher W. Lamond, Systems Administrator
Steve Diamond, Senator Susan Collins
Jim Rowland, Senator Sam Brownback
Brian Benczkowski, Senator Pete V. Domenici
Michael Loesch, Senator Thad Cochran
Barbara Olson, Senator Don Nickles
William J. Morley, Senator Arlen Specter
Rick Valentine, Senator Bob Smith
Bill Triplett, Senator Robert F. Bennett
MINORITY STAFF
Alan Baron, Minority Chief Counsel
Pamela Marple, Deputy Chief Counsel
David McKean, Deputy Chief Counsel
Jeffrey Robbins, Deputy Chief Counsel
Alan Edelman, Counsel
Jonathan Frenkel, Counsel
Jim Lamb, Counsel
Deborah Lehrich, Counsel
Cassandra Lentchner, Counsel
Dianne Pickersgill, Counsel
Lisa Rosenberg, Counsel
Kevin Simpson, Counsel
Howard Sklamberg, Counsel
Beth Stein, Counsel
David Cahn, Assistant Counsel
Sarah Des Pres, Assistant Counsel
Peter Rosenberg, Assistant Counsel
Larry Gurwin, Investigator
Jim Jordan, Press Secretary
Holly Koerber, Clerk
Bill McDaniel, Investigator
Jay Youngclaus, Investigator
Caroline Badinelli, Staff Assistant
Ann Metler, Research Assistant
Jessica Robinson, Staff Assistant
Rachael Sullivan, Staff Assistant
Nichole Veatch, Staff Assistant
Linda Gustitus, Governmental Affairs Committee, Senator Levin
Elise Bean, Governmental Affairs Committee, Senator Levin
Laurie Rubenstein, Governmental Affairs Committee, Senator Lieberman
Nanci Langly, Governmental Affairs Committee, Senator Akaka
Marianne Upton, Governmental Affairs Committee, Senator Durbin
Matthew Tanielian, Governmental Affairs Committee, Senator Torricelli
Bill Johnstone, Governmental Affairs Committee, Senator Cleland
FBI DETAIL
Anne Asbury, Investigator
Jerome Campane, Investigator-FBI Detail Leader
Becky Chan, Investigator
Jeffrey Harris, Investigator
Steven Hendershot, Investigator
James Kunkel, Investigator
Kelli Sligh, Investigator
Vo ``Ben'' Tran, Investigator
C O N T E N T S
----------
Page
Chapter:
1. Preface................................................... 1
2. Procedural Background and Overview........................ 5
3. Summary of Findings....................................... 31
4. The Thirst for Money...................................... 51
5. The White House Controlled the DNC and Improperly
Coordinated the Activities of the DNC and Clinton/Gore '96. 105
6. The DNC Dismantled Its System for Vetting Contributions... 167
7. DNC Fundraising in the White House: Coffees, Overnights,
and Other Events........................................... 191
8. Fundraising Calls from the White House.................... 499
9. White House Vetting of Individuals with Access to the
President.................................................. 751
10. Johnny Chung and the White House ``Subway''.............. 781
11. The Contribution of Yogesh Gandhi........................ 917
12. Ted Sioeng, His Family, and His Business Interests....... 961
13. John Huang's Years at Lippo.............................. 1117
14. John Huang at Commerce................................... 1153
15. John Huang Moves from Commerce to the DNC................ 1653
16. John Huang's Illegal Fundraising at the DNC.............. 1689
17. The Hsi Lai Temple Fundraiser and Maria Hsia............. 1749
18. The China Connection: Summary of Committee's Findings
Relating to the Efforts of the People's Republic of China
to Influence U.S. Policies and Elections................... 2499
19. Charlie Trie's and Ng Lap Seng's Laundered Contributions
to the DNC................................................. 2517
20. Charlie Trie's Contributions to the Presidential Legal
Expense Trust.............................................. 2711
21. The Saga of Roger Tamraz................................. 2905
22. DNC Efforts to Raise Money in the Indian Gaming Community 3071
23. The Hudson, Wisconsin Casino Proposal.................... 3165
24. The Cheyenne and Arapaho Tribes: Their Quest for the Fort
Reno Lands................................................. 3547
25. The Offer of R. Warren Meddoff........................... 3623
26. White House, DNC and Clinton-Gore Campaign Fundraising
Efforts Involving the International Brotherhood of
Teamsters.................................................. 3655
27. Compliance by Nonprofit Groups with Committee Subpoenas.. 3833
28. Role of Nonprofit Groups in the 1996 Elections........... 3993
29. Allegations Relating to the National Policy Forum........ 4195
30. White House Document Production.......................... 4277
31. DNC Document Production.................................. 4425
32. Campaign Finance Reform Issues Brought to the Forefront
by the Special Investigation............................... 4459
33. Recommendations.......................................... 4503
Additional Views
34. Additional Views of Chairman Fred Thompson............... 4511
35. Additional Views of Senator Susan Collins................ 4535
36. Additional Views of Senator Arlen Specter................ 4539
37. Additional Views of Senator Robert Bennett............... 4545
Minority Views
38. Additional Views of Senators Glenn, Levin, Lieberman,
Akaka, Durbin, Torricelli and Cleland...................... 4557
39. Additional Views of Senator Glenn........................ 9507
40. Additional Views of Senator Levin........................ 9511
41. Additional Views of Senator Lieberman.................... 9525
42. Additional Views of Senator Akaka........................ 9559
43. Additional Views of Senator Durbin....................... 9565
44. Additional Views of Senator Torricelli................... 9571
MINORITY VIEWS OF SENATORS GLENN, LEVIN, LIEBERMAN, AKAKA, DURBIN,
TORRICELLI AND CLELAND
Table of Contents
Page
Foreword......................................................... 4559
Executive Summary................................................ 4561
Part 1 Foreign Influence........................................ 4577
Chapter 1: Overview and Legal Analysis........................... 4577
Findings..................................................... 4577
Overview of Following Chapters............................... 4577
Legal Analysis............................................... 4579
Chapter 2: The China Plan........................................ 4619
Findings..................................................... 4620
Introduction................................................. 4621
The Committee's Investigation................................ 4623
Background................................................... 4623
The China Plan............................................... 4625
Events Leading up to the China Plan...................... 4625
Information about the China Plan......................... 4626
Implementation of the China Plan......................... 4627
Legal Activities......................................... 4627
Illegal Activities....................................... 4628
Individuals Under Investigation and the China Plan....... 4628
Ted Sioeng............................................... 4629
John Huang and Maria Hsia................................ 4630
The Riadys............................................... 4630
Intermediaries: Relation to the Committee's Public
Investigation.......................................... 4631
Political Contributions to Federal Elections............. 4632
Political Contributions: Relation to the Committee's
Public Investigation................................... 4633
Information not Pursued by the Committee..................... 4633
Conclusion................................................... 4634
Chapter 3: The National Policy Forum............................. 4657
Findings..................................................... 4657
Introduction................................................. 4657
Haley Barbour................................................ 4659
Ambrous Young................................................ 4659
Origin Of the National Policy Forum.......................... 4660
The Barbour-Baroody Split................................... 4661
Funding the NPF.............................................. 4661
Baroody Resigns.............................................. 4662
The NPF Under John Bolton.................................... 4663
Barbour Solicits Ambrous Young............................... 4665
The Loan Transaction......................................... 4666
Funding the Contract With America............................ 4668
The Trip to Hong Kong........................................ 4669
The Trip to China............................................ 4670
The Default.................................................. 4670
Other Foreign Contributions.................................. 4671
Conclusion................................................... 4672
Chapter 4: John Huang............................................ 4788
Findings..................................................... 4788
Huang's Early Career......................................... 4789
Background on the Lippo Group................................ 4790
Huang's Activities on Behalf of the Lippo Group.............. 4791
Political Contributions.................................. 4792
Huang's Tenure at the Department of Commerce................. 4794
Huang's Appointment...................................... 4794
Huang's Role at Commerce................................. 4796
Huang's Security Clearance and Access to Classified
Information............................................ 4798
Granting of Top Secret Clearance......................... 4799
Huang's Access to Classified Information................. 4800
Huang's Use of the Stephens Office....................... 4802
Huang's Post-Commerce Clearance.......................... 4803
No Evidence of Espionage................................. 4806
Evidence of Solicitations of Contributions............... 4808
Hiring Huang to Work at the DNC.............................. 4811
Huang's Understanding of Applicable Law.................. 4813
Huang's Fundraisers...................................... 4814
February 1996 Hay Adams APALC Events, Washington, D.C.... 4814
May 13, 1996 Sheraton Carlton Event, Washington, D.C..... 4816
July 22, 1996 Century Plaza Hotel Event, Los Angeles..... 4816
July 30, 1996 Jefferson Hotel Event, Washington, D.C..... 4817
Other Huang Activities................................... 4818
Hsi Lai Temple Event..................................... 4818
The Vice President and the Temple Event.................. 4819
John Huang and the Temple Event.......................... 4831
John H. K. Lee and the Cheong Am America Contribution.... 4832
June 18, 1996, DNC Coffee at the White House............. 4836
Rawlein Soberano......................................... 4838
The DNC's Supervision of Huang........................... 4839
Conclusion................................................... 4840
Chapter 5: Charlie Trie.......................................... 5270
Findings..................................................... 5270
Background................................................... 5271
Trie's DNC Contributions and Fundraising..................... 5272
Trie's DNC Contributions................................. 5272
Trie's DNC Fundraising................................... 5274
Chu and Wang Contributions................................... 5275
DNC Awareness of Trie's Activities........................... 5276
Trie's Fundraising for the Presidential Legal Expense Trust.. 5277
Trie's March 21, 1996 Meeting with Cardozo............... 5278
Investigation into the Contributions..................... 5279
The Trust's Decision to Reject the Contributions......... 5281
The Trust's Change in Accounting Procedures.............. 5282
Foreign Funds............................................ 5283
Analysis................................................. 5284
Trie's Access to White House and DNC Events.................. 5285
Trie's Commission Appointment................................ 5287
Trie and Wang Jun at the White House......................... 5289
Wang Jun's Invitation to the White House Coffee.......... 5290
Role of Ernest Green..................................... 5291
Analysis................................................. 5292
Trie and China............................................... 5293
Chapter 6: Michael Kojima........................................ 5413
Findings..................................................... 5413
Contribution History......................................... 5415
Kojima's Access to the White House and Other Perks........... 5415
The Bush White House and Fundraising......................... 5418
GOP Claimed No Duty to Investigate........................... 5423
Foreign Funds................................................ 5425
Failure to Conduct a Federal Investigation................... 5427
Conclusion................................................... 5428
Chapter 7: Ted Sioeng............................................ 5573
Findings..................................................... 5573
Ted Sioeng's Background...................................... 5573
Sioeng's Connections to China................................ 5574
The ``China Plan'' and Ted Sioeng............................ 5576
The Sioeng Family's Contributions to Matt Fong in April 1995. 5576
The Source of Sioeng's April 1995 Contributions to Fong...... 5578
Fong Arranges for Sioeng to Meet Speaker Gingrich............ 5578
The Sioeng Family's Contributions to the National Policy
Forum...................................................... 5579
The Sioeng Family's Contribution to Matt Fong in December
1995....................................................... 5580
Jessica Elnitiarta's Contributions to the DNC................ 5581
The Hay Adams Fundraiser................................. 5581
Hsi Lai Buddhist Temple Event............................ 5582
Sheraton Carlton Hotel Event............................. 5582
Century City Event and Subsequent $50,000 Contribution... 5583
Conclusion................................................... 5584
Chapter 8: Jay Kim............................................... 5683
Findings..................................................... 5683
The Korea Traders' Club...................................... 5683
Kim's Contribution From His Own Business in 1992............. 5684
The Kim's Acceptance of Corporate Funds...................... 5684
Acceptance of Funds From Foreign Nationals................... 5685
Alleged Violations During the Federal Investigation.......... 5686
The Conviction of Kim's Former Campaign Treasurer............ 5686
Possible Election Law Violations During the 1996 Cycle....... 5687
Kim's Commitment to Compliance With U.S. Election Laws....... 5688
The Kims' Book Deal.......................................... 5689
Conclusion................................................... 5690
Part 2 Independent Groups....................................... 5926
Chapter 9: Overview and Legal Analysis........................... 5926
Findings..................................................... 5926
Overview of Following Chapters............................... 5926
1996 Election-Related Activities......................... 5927
Legal Analysis............................................... 5928
Categories of Independent Groups......................... 5929
Disclosure............................................... 5930
Coordination............................................. 5930
Circumvention............................................ 5933
Third Party Contributions................................ 5934
Violations of Tax Law.................................... 5934
Chapter 10: The Republican Party and Independent Groups.......... 5967
Findings..................................................... 5967
Introduction................................................. 5967
RNC Ties to Independent Groups............................... 5969
Coalition Plans.......................................... 5969
Coordination during the 1996 Election Cycle.............. 5973
RNC Funding of Independent Groups........................ 5974
RNC Funding Schemes in the 1996 Election Cycle........... 5975
RNC Contributions and Fundraising Help in 1996........... 5976
Circumventing Campaign Finance Laws...................... 5978
The RNC's Front Organizations................................ 5979
The National Policy Forum................................ 5980
Coalition for Our Children's Future...................... 5981
Fronts For Conservative Donors............................... 5981
CCF's Attack Ads......................................... 5981
Triad's Attack Ads....................................... 5982
Triad's Donors........................................... 5982
Conclusion................................................... 5983
Chapter 11: Americans for Tax Reform............................. 6034
Findings..................................................... 6034
Background................................................... 6034
Grover Norquist.............................................. 6035
The $4.6 Million October Surprise............................ 6037
ATR Televised Attack Ads..................................... 6041
ATR Candidate Advocacy....................................... 6043
ATR: Coordinated Efforts in 1996 to Elect Republicans To
Office..................................................... 6048
RNC-Directed Contributions to ATR............................ 6050
ATR and RNC's Refusal to Cooperate........................... 6051
Possible Civil, Criminal, and Tax Law Violations............. 6052
Circumvention............................................ 6052
Coordination............................................. 6053
Disclosure............................................... 6053
Tax Laws................................................. 6054
Conclusion................................................... 6055
Chapter 12: Triad and Related Organizations...................... 6289
Findings..................................................... 6289
Introduction................................................. 6290
Background................................................... 6290
The Committee's Investigation of Triad....................... 6291
The Political Operation of Triad Management.................. 6293
Triad is Not a Business.................................. 6293
Robert Cone's Financial Support of Triad................. 6293
Corporate Contributions by Triad......................... 6294
Triad and Political Action Committees.................... 6297
The Advertising Campaign..................................... 6301
Creation of Citizens for Reform and Citizens for the
Republic............................................... 6301
Improper Coordination of Triad's Advertising with
Political Candidates................................... 6303
No Comparison Between Triad and the AFL-CIO.............. 6306
Financing the Advertising Campaign....................... 6307
The Trusts Behind Triad.................................. 6308
Economic Education Trust................................. 6309
Triad's Impact on the 1996 Elections..................... 6312
Advertising by Other Triad Contributors.................. 6312
Conclusion................................................... 6313
Chapter 13: Coalition for Our Children's Future.................. 6771
Findings..................................................... 6771
Background................................................... 6771
RNC Ties to CCF.............................................. 6772
CCF's 1995 Advertising Campaign.......................... 6774
CCF and its Exempt Organization Status................... 6775
CCF 1996 Advertising for Republican Candidates............... 6777
The Secret Trust and CCF's 1996 Election Advertising......... 6780
Did CCF's Secret Contributor Fund Triad Attack Ads?...... 6781
Conclusion................................................... 6782
Chapter 14: Christian Coalition.................................. 6934
Finding...................................................... 6934
Background................................................... 6934
Pat Robertson and Ralph Reed................................. 6935
Voter Guides Before the 1996 Election Cycle.................. 6937
Distortion of Candidates' Positions on Issues................ 6937
Voter Guides in the 1996 Election Cycle...................... 6938
Coalition Officials Endorsed Candidates...................... 6941
Coalition Ties to the Republican Party....................... 6944
Coalition Activity in State Elections........................ 6947
FEC Action................................................... 6949
Conclusion................................................... 6951
Chapter 15: Other Independent Groups............................. 7051
Seniors Organizations........................................ 7051
Term Limits Groups as Fronts for GOP Donors.................. 7053
Nonprofit Groups Linked to Presidential Candidates........... 7055
Conclusion................................................... 7055
Chapter 16: The Democratic Party and Independent Groups.......... 7062
Findings..................................................... 7062
Chapter 17: Warren Meddoff....................................... 7064
Findings..................................................... 7064
Warren Meddoff............................................... 7064
Meddoff and the October 1996 Fundraiser...................... 7065
Ickes Conversations With Meddoff............................. 7066
No Evidence of Illegal Coordination.......................... 7067
Ickes's Alleged Direction to Meddoff to Shred the Fax........ 7068
Meddoff's Credibility........................................ 7068
The DNC'S Refusal of the Contribution Offer.................. 7071
Fundraising on Federal Property.............................. 7072
Conclusion................................................... 7073
Chapter 18: Teamsters............................................ 7102
Findings..................................................... 7102
Teamster Contributions....................................... 7102
Martin Davis's Initial Contacts With DNC Officials....... 7103
Judith Vasquez's Contribution to Vote Now '96............ 7104
Teamsters' Contributions................................. 7105
Sullivan's Role.............................................. 7106
Proposed Contribution to Unity '96........................... 7107
DCCC Executive Director Rejected the Proposal............ 7107
DCCC Chairman Rejected the Proposal...................... 7108
DSCC Deputy Executive Director Rejected the Proposal..... 7108
DSCC Chairman Rejected the Proposal...................... 7109
The Proposal and Unity '96............................... 7109
Conclusion................................................... 7109
Chapter 19: Other Independent Groups............................. 7235
Findings..................................................... 7235
Overview..................................................... 7235
The DNC and Independent Groups............................... 7236
Activities of Independent Groups............................. 7237
The AFL-CIO.............................................. 7237
Vote Now '96............................................. 7238
Citizen Action........................................... 7239
National Council of Senior Citizens...................... 7239
Conclusion................................................... 7239
Part 3 Contribution Laundering/Third Party Transfers............ 7241
Chapter 20: Overview and Legal Analysis.......................... 7241
Finding...................................................... 7241
Overview of Following Chapters............................... 7241
Legal Analysis............................................... 7242
Chapter 21: Contributions to the Democratic Party................ 7244
Findings..................................................... 7244
Keshi Zhan, Yue Chu, and Xiping Wang......................... 7246
Pauline Kanchanalak.......................................... 7248
Yogesh Gandhi................................................ 7249
Hsi Lai Temple Monastics..................................... 7253
Arief and Soraya Wiaridinata................................. 7256
The Lum Family............................................... 7257
Conclusion................................................... 7258
Chapter 22: Contributions to the Republican Party................ 7372
Findings..................................................... 7372
Michael Kojima............................................... 7372
Aqua Leisure Industries, Inc................................. 7375
Empire Sanitary Landfill, Inc................................ 7377
Deluca Liquor and Wine, Ltd.................................. 7378
Conclusion................................................... 7379
Part 4 Soft Money and Issue Advocacy............................ 7515
Chapter 23: Systemic Problems of the Campaign Finance System..... 7515
Findings..................................................... 7515
Introduction................................................. 7515
Soft Money................................................... 7516
Background on Soft Money................................. 7516
Soft Money Finds a Way into Federal Elections............ 7517
Soft Money Creates the Appearance of Corruption and
Undermines Public Financing............................ 7519
Disclosure of Soft Money................................. 7520
Issue Advocacy............................................... 7521
Background on Issue Ads.................................. 7522
Proposals for Reform......................................... 7524
Kassebaum-Baker/Mondale.................................. 7525
League of Women Voters................................... 7525
Common Cause............................................. 7526
Campaign Reform Project.................................. 7526
Public Campaign.......................................... 7526
Disclosure Only.......................................... 7526
Conclusion................................................... 7526
Part 5 Fundraising and Political Activities of the National
Parties and Administrations.................................... 7540
Chapter 24: Overview and Legal Analysis.......................... 7540
Finding...................................................... 7540
Overview of Following Chapters............................... 7540
Legal Analysis............................................... 7541
Taking Official Action in Exchange for a Contribution.... 7541
Use of Federal Property.................................. 7542
Use of Federal Employees................................. 7544
Spending Limits, Coordination and Issue Advocacy......... 7546
Chapter 25: DNC and RNC Fundraising Practices and Problems....... 7595
Findings..................................................... 7595
Introduction................................................. 7596
Structure of the National Parties............................ 7598
The Democratic National Committee........................ 7598
The Republican National Committee........................ 7599
Fundraising Drives........................................... 7600
Soliciting Contributions..................................... 7600
Training Fundraisers..................................... 7601
The DNC's Training Procedures and Problems............... 7601
The RNC's Training Procedures and Problems............... 7602
Contribution Compliance.................................. 7602
The DNC's Contribution Compliance and Problems........... 7602
The RNC's Contribution Compliance and Problems........... 7603
Telephone Solicitations from Federal Property............ 7605
Organizing Fundraisers and Other Events...................... 7605
DNC Events and Contributor Services...................... 7605
RNC Events and Contributor Services...................... 7606
Spending Party Funds......................................... 7607
DNC'S Splitting Contributions Between Hard and Soft Money
Accounts................................................... 7608
Conclusion................................................... 7609
Chapter 26: Telephone Solicitations From Federal Property........ 7773
Findings..................................................... 7773
Presidential Telephone Calls................................. 7773
Richard Jenrette......................................... 7774
Vice Presidential Telephone Calls............................ 7776
Purpose of the Phone Calls............................... 7777
Raising Soft Money....................................... 7780
DNC Splitting Contributions Between Hard and Soft Money
Accounts............................................... 7781
Applicability of the Pendleton Act....................... 7783
The Contributors......................................... 7783
Payment for the Phone Calls.............................. 7783
Payment for the Thank-You Notes.......................... 7784
No Other Costs to the Government......................... 7784
Republican Phone Calls....................................... 7785
Conclusion................................................... 7786
Chapter 27: White House Coffees and Overnights................... 7956
Findings..................................................... 7956
DNC Coffees at the White House............................... 7956
The Coffees and Fundraising.............................. 7957
The Coffees as DNC Events................................ 7959
The Law and Precedent.................................... 7960
White House Overnights....................................... 7960
Conclusion................................................... 7961
Chapter 28: Republican Use of Federal Property and Contributor
Access......................................................... 7968
Findings..................................................... 7968
Major Contributor Access to Elected Officials................ 7968
Republican Eagles........................................ 7968
Team 100................................................. 7970
Other Republican Events and Meetings for Contributions... 7972
Use of Federal Property For Fundraising...................... 7975
Political Appointments Awarded to Republican Contributors.... 7977
Conclusion................................................... 7978
Chapter 29: Democratic Contributor Access to the White House..... 8057
Findings..................................................... 8057
Introduction................................................. 8057
The Secret Service........................................... 8058
The White House Office of Political Affairs.................. 8059
The National Security Council................................ 8060
Previous NSC Procedures.................................. 8061
Current NSC Procedures................................... 8062
Other Issues............................................. 8063
Conclusion................................................... 8065
Chapter 30: Roger Tamraz......................................... 8095
Findings..................................................... 8095
Overview..................................................... 8095
1970-1990: Tamraz's Business Ventures, Dealings With the CIA
and Political Contributions................................ 8096
Business Ventures........................................ 8096
Reported Contacts with the CIA........................... 8097
RNC's Recommendation for a Reagan Administration Position 8097
Tamraz Leaves Lebanon after Embezzlement Charges......... 8098
1994-1995: The Commerce Department........................... 8098
1995: The Caspian Sea Pipeline............................... 8099
U.S. Policy on the Caspian Sea Pipeline.................. 8099
May-June 1995: Meetings with Executive Branch Officials.. 8100
Bob of the CIA........................................... 8101
July-October 1995: Contributions to the Democratic Party..... 8103
Contribution History..................................... 8103
The DNC's Acceptance of Tamraz's Contributions........... 8103
September 1995: Request For an Official Meeting With the Vice
President.................................................. 8104
Tamraz's Attendance at DNC Events............................ 8105
Summary of Events........................................ 8105
Fowler's Role............................................ 8105
No Effect on Policy...................................... 8107
April 1996: Department of Energy Official Talks to Heslin.... 8107
Tamraz's Attendance at March 27 and April 1, 1996 DNC
Events................................................. 8107
Follow-Up on the Pipeline Project........................ 8108
The Request within the Department of Energy.............. 8109
Carter's Call to Heslin.................................. 8110
Heslin's Testimony....................................... 8110
Carter's Testimony....................................... 8110
The Department of Energy Responds to the Request for
Information Conclusions................................ 8111
Conclusion: Access Still for Sale in 1997.................... 8113
Chapter 31: Other Contributor Access Issues...................... 8250
Findings..................................................... 8250
Johnny Chung................................................. 8250
Political Contributions.................................. 8251
Access to Administration Officials....................... 8251
Link Between Contributions and Visits.................... 8252
Williams's Handling of Chung's $50,000 DNC Contribution.. 8253
The Pendleton Act........................................ 8255
The Hatch Act............................................ 8256
Other Individuals............................................ 8256
Jorge Cabrera............................................ 8256
Grigori Loutchansky...................................... 8257
Wang Jun................................................. 8258
Yung Soo Yoo............................................. 8259
Michael Kojima........................................... 8260
Conclusion................................................... 8260
Chapter 32: Coordination Among the Democratic National Committee
and the Clinton/Gore Campaign and the White House.............. 8281
Findings..................................................... 8282
Introduction and Summary..................................... 8282
The Origin of the DNC's Issue Ads Campaign................... 8282
The DNC and Rules Governing Issue Ads........................ 8283
The DNC Adhered to the Legal Rules Governing Issue Ads....... 8285
The Clinton Campaign and the DNC Campaign.................... 8286
The Legality of Coordination Among the Clinton Campaign,
White House and DNC........................................ 8286
The President's Role in the Making of DNC Issue Ads...... 8286
Ickes's Role in Coordinating with the DNC................ 8287
Conclusion................................................... 8290
Chapter 33: Coordination Between the Republican National
Committee and the Dole for President Campaign.................. 8294
Findings..................................................... 8294
Introduction................................................. 8294
The Origin of the Pro-Dole Issue Ads......................... 8295
Dole for President and the Dole/RNC Campaign................. 8296
The Substance of Dole/RNC Issue Ads.......................... 8297
The Dole/RNC ``Issue Ads'' and Presidential Battleground
States..................................................... 8299
Dole/RNC Issue Ads and Soft Money............................ 8300
Coordination of Fundraising and Political Efforts............ 8301
Dole for President and the RNC Impeded the Committee's
Investigation.............................................. 8302
Conclusion................................................... 8303
Part 6 Allegations of Quid Pro Quos............................. 8368
Chapter 34: Overview and Legal Analysis.......................... 8368
Legal Analysis............................................... 8368
Overview of Following Chapters............................... 8369
Chapter 35: Hudson Casino........................................ 8371
Findings..................................................... 8371
Overview..................................................... 8372
Secretary Babbitt's Remarks to Lobbyist Eckstein............. 8372
Eckstein's Affidavit..................................... 8372
Secretary Babbitt's Letter to Senator McCain............. 8373
Eckstein's Deposition.................................... 8373
Secretary Babbitt's Letter to Chairman Thompson.......... 8374
Secretary Babbitt's Hearing Testimony.................... 8374
Eckstein's Allegations....................................... 8376
Eckstein's Interpretation.................................... 8378
Secretary Babbitt and Lobbyists for the Opposing Tribes...... 8378
Role of the White House...................................... 8379
Lobbyist Contacts with Harold Ickes...................... 8379
White House Requested Status Report from Interior........ 8380
White House Requested Second Status Report from Interior. 8381
White House and Interior Confer on Response to
Congressional Inquiry.................................. 8382
Other Interior and White House Contacts.................. 8382
Eckstein's Access to Interior Officials...................... 8383
Eckstein's Telephone Contacts with Secretary Babbitt..... 8383
The Tribal Applicants' May 1995 Meeting with Interior
Officials.............................................. 8384
Eckstein's July 14 Meeting with Secretary Babbitt........ 8384
The Merits of Interior's Decision on the Hudson Application.. 8385
The Hudson Casino and the Surrounding Community.......... 8385
The Surrounding Communities Opposed the Hudson Casino
Proposal............................................... 8386
Interior Staff Recommended Denial........................ 8387
The Administrative Record................................ 8388
Allegations of Timing and Political Pressure............. 8389
Interior's Final Decision-Maker Acted on the Merits...... 8390
Conclusion................................................... 8390
Chapter 36: Tobacco and the 1996 Election Cycle.................. 8511
Findings..................................................... 8511
The Tobacco Industry's Political Contributions During the
1996 Election Cycle........................................ 8511
Republican Assistance to Tobacco Companies................... 8512
Haley Barbour Assisted Tobacco............................... 8513
Tobacco Settlement and the $50 Billion Tobacco Tax Credit.... 8514
Haley Barbour and Kenneth Kies............................... 8515
Conclusion................................................... 8517
Chapter 37: Cheyenne-Arapaho Tribes of Oklahoma.................. 8539
Findings..................................................... 8539
Overview..................................................... 8539
The Battle Over the Closure of the Fort Reno ARS............. 8540
The Tribes Increase Their Political Activities............... 8543
The Tribes' Contribution to the DNC.......................... 8545
The White House Luncheon..................................... 8547
The President's Birthday Fundraiser.......................... 8552
The Tribes Continue Their Lobbying Efforts................... 8553
The Tribes' Dealings with Mike Copperthite, Nathan Landow,
and Peter Knight........................................... 8554
The Tribes' Dealings with Cody Shearer and Terry Lenzner..... 8560
The Tribes' Contribution is Returned......................... 8561
Conclusion................................................... 8562
Part 7 Investigation Process.................................... 8680
Chapter 38: Laying the Groundwork................................ 8680
Findings..................................................... 8680
Introduction................................................. 8680
Initial Floor Statements By Chairman Thompson and Senator
Glenn...................................................... 8681
Organizational Meeting....................................... 8683
A. Budget................................................ 8683
B. Scope................................................. 8685
C. Process............................................... 8686
D. Termination Date...................................... 8686
First Public Debate On Issuance of Subpoenas................. 8687
Alternative Resolution, S. Res. 61........................... 8687
Rules Committee Appearances.................................. 8687
Final Floor Debate........................................... 8689
The Majority Impeded a Fair Investigation.................... 8689
A. Subpoenas............................................. 8690
B. Consideration of Grants of Immunity................... 8690
C. Interviews............................................ 8691
D. Hearings.............................................. 8692
Conclusion................................................... 8693
Chapter 39: Democratic Compliance Issues......................... 8710
Finding...................................................... 8711
DNC Cooperation and Compliance............................... 8711
Attorney-Client Privilege Issue.......................... 8712
Late Production of Certain Files......................... 8713
Conclusion................................................... 8713
Chapter 40: Republican Compliance Issues......................... 8775
Findings..................................................... 8775
Introduction................................................. 8775
The First Subpoenas.......................................... 8776
RNC Compliance Issues........................................ 8777
Triad Compliance Issues...................................... 8779
The NPF Order................................................ 8780
NPF Compliance Issues........................................ 8780
ATR Compliance Issues........................................ 8782
Conclusion................................................... 8785
Chapter 41: The Breakdown of Compliance.......................... 8938
Finding...................................................... 8938
Introduction................................................. 8938
Organizations Suggested for Subpoena by the Minority......... 8941
Tax-Exempt Groups Linked to Presidential Campaigns........... 8941
Republican Exchange Satellite Network and Lamar Alexander 8941
Better America Foundation and Bob Dole................... 8942
The American Cause and Pat Buchanan...................... 8943
Other Tax-Exempt Groups...................................... 8943
Citizens Against Government Waste........................ 8943
The Heritage Foundation.................................. 8944
The Coalition: Americans Working for Real Change......... 8944
American Defense Institute/American Defense Foundation... 8945
Citizens for a Sound Economy............................. 8945
Women for Tax Reform..................................... 8946
National Right to Life Committee......................... 8946
The Christian Coalition.................................. 8946
Private Corporations Linked to Contribution Laundering....... 8947
DeLuca Liquor & Wine and Empire Landfill, Danella Inc./
USA Waste Services of Eastern Pennsylvania............. 8947
Organizations Suggested for Subpoena by the Majority......... 8947
National Council of Senior Citizens...................... 8948
Citizen Action........................................... 8949
National Education Association........................... 8949
Vote Now '96............................................. 8950
Campaign to Defeat Proposition 209....................... 8950
The Sierra Club.......................................... 8950
Democratic Leadership Council............................ 8951
EMILY'S List............................................. 8951
National Committee for an Effective Congress............. 8951
American Trial Lawyers Association....................... 8951
Americans United for Separation of Church and State...... 8951
Conclusion................................................... 8952
Chapter 42: White House Tapes.................................... 9331
Findings..................................................... 9331
Overview..................................................... 9331
Video and Audio Taping in the White House.................... 9332
The White House Communications Agency........................ 9333
Videotape Procedures for Coffees............................. 9334
The Initial Failure to Identify Responsive Videotapes........ 9335
White House Definition of Document........................... 9337
White House Search Procedures................................ 9339
White House Responses to Committee Inquiries About Videotapes 9340
Notifying the Department of Justice of the Existence of
Responsive Videotapes...................................... 9344
Deputy White House Counsel and the Videotapes................ 9345
Allegations Concerning Alteration of the Videotapes.......... 9345
Other Production Issues...................................... 9346
The Presidential ``Diary''............................... 9346
WAVE Records Relating to Mr. Wu.......................... 9347
Lisa Berg documents...................................... 9348
Conclusion................................................... 9349
Part 8 Minority Recommendations................................. 9394
Part 9 Response to Majority Report.............................. 9399
Senator Glenn's Additional Views................................. 9507
Senator Levin's Additional Views................................. 9511
Senator Lieberman's Additional Views............................. 9525
Senator Akaka's Additional Views................................. 9559
Senator Durbin's Additional Views................................ 9565
Senator Torricelli's Additional Views............................ 9571
PART 5 FUNDRAISING AND POLITICAL ACTIVITIES OF THE NATIONAL PARTIES
AND ADMINISTRATIONS
Chapter 29: Democratic Contributor Access to the White House
From 1993 through 1996, the Democratic National Committee
organized numerous events to which it invited supporters of the
Democratic Party and their guests. Many DNC events were held
inside the White House complex and were attended by the
President or Vice President. For those events, the DNC
generated guest lists and forwarded names of attendees to the
White House Office of Political Affairs, which generally did
not conduct an independent review of the list. On several
occasions, the DNC asked for additional information about
persons under consideration for invitations to White House
events. In these situations, the White House Office of
Political Affairs forwarded the request to the National
Security Council (``NSC'') or other knowledgeable White House
staff for recommendations regarding the individual's attending
an event with the President or Vice President.
The Committee investigated the procedures used by the White
House to assess and approve individuals invited by the DNC to
attend events in the White House.
FINDINGS
(1) From 1993 through 1996, White House procedures for
assessing and approving individuals invited by the DNC to
attend events in the White House were similar to the procedures
used by prior administrations, but such procedures were
inadequate. The White House Office of Political Affairs relied
on the DNC (and in prior administrations, the RNC) to assess
the appropriateness of attendees at DNC (RNC) events at which
the President was present. Unfortunately, from 1993 through
1996, the DNC did not adequately perform that function.
(2) When asked to provide information regarding the foreign
policy implications arising from DNC-organized events, the
National Security Council performed its function.
Unfortunately, prior to 1997, the White House did not have a
formal structure to adequately assess and approve all attendees
at DNC events where the President was present.
INTRODUCTION
For DNC events held in the White House, the Secret Service
Agency and the White House Office of Political Affairs are
responsible for assessing DNC guests in order to both guard the
physical security of the President and to protect the integrity
of the Office of the Presidency and the policies of the United
States. Before an individual may enter the White House complex,
Secret Service officials conduct a background check to
determine whether the individual poses a physical threat to the
President or White House staff. To determine whether an
individual is otherwise appropriate to attend DNC events at the
White House, the White House Office of Political Affairs is
responsible for obtaining and approving DNC proposed guest
lists. From 1993 through 1996, the White House Office of
Political Affairs followed the practice of previous
administrations and relied on the judgment of its national
party to provide appropriate information about political
supporters scheduled to attend White House events. According to
the testimony of an 18-year career White House employee,
administrations have handled invitations to RNC and DNC events
at the White House in the same way as the current
Administration handled similar invitations from 1993 through
1996.1 When questions were raised by the party about
possible negative implications of the event or specific
attendees, the White House Office of Political Affairs sought
relevant information from the NSC and other knowledgeable White
House staff in order to make appropriate decisions.
---------------------------------------------------------------------------
Footnotes at end of Chapter 29.
---------------------------------------------------------------------------
This section discusses the Committee's investigation of the
White House procedures used to assess and approve individuals
invited by the DNC to attend events inside the White House
complex, focusing on the functions of the Secret Service, the
White House Office of Political Affairs and the National
Security Council.
THE SECRET SERVICE
The Secret Service is responsible for the physical security
of the White House complex, which consists of the New Executive
Office Building, the Old Executive Office Building, and the
White House itself, as well as the physical security of certain
White House officials, particularly the President and Vice
President.
Visitors to the White House complex, except for individuals
on public tours, are screened by the Secret Service through a
process known as ``WAVEs,'' which stands for Worker and Visitor
Entrance System. In order for an individual to enter the White
House complex under the WAVEs system, an employee of the White
House must first submit a computer message to the Secret
Service requesting that the individual be admitted to the
complex on a specified day and time. In response, a Secret
Service officer conducts a name check on the individual through
the National Crime Information Center (``NCIC''), which
contains criminal history and warrant information.2
If the officer does not discover pertinent criminal information
about the individual, the officer clears the individual for
entrance through one of the secured gates of the complex.
If the NCIC check does yield pertinent information on a
requested individual, the officer conveys that information to a
Secret Service supervisor.3 The supervisor is
responsible for reviewing the information to determine whether
the individual's entrance into the White House complex may pose
a physical threat to the President or Vice President, or to the
White House complex generally.4 In making this
determination, the supervisor focuses on whether the
information suggests that the individual may be violent,
dangerous, or in other ways may present a physical or security
threat.5 If the supervisor determines that the
individual should not be admitted to the White House for these
reasons, the supervisor prohibits clearance for the individual
and notifies the White House employee who had requested that
the individual be admitted that no clearance would be
granted.6 The Secret Service does not convey the
basis of this decision to White House staff.7 The
Secret Service does not assess or make admittance
determinations based on issues involving the general
appropriateness of an individual entering the White House or
meeting with the President or Vice President.8 These
Secret Service procedures have been in effect since
1984.9
The responsibility of the Secret Service for screening
potential White House visitors, including guests invited by the
DNC, is therefore limited to an assessment of whether the
individual may pose a physical threat to the White House
complex or to the President or Vice President.10
This narrow review is supplemented by other determinations made
independently by the White House Office of Political Affairs
and the NSC.
THE WHITE HOUSE OFFICE OF POLITICAL AFFAIRS
DNC officials seeking to organize events on the White House
grounds coordinate with the White House Office of Political
Affairs. From 1993 to 1997, the DNC organized these events by
coordinating schedules and other logistics with the White House
Office of Political Affairs, and by forwarding a list of
proposed attendees for each event.11 During this
time period, it is not clear what procedures were used inside
the DNC for assessing the appropriateness of the list of event
attendees before it was forwarded to the White House Office of
Political Affairs. DNC Finance Chairman Richard Sullivan
testified that it was his understanding that DNC staff within
the Finance Division was responsible for compiling the lists
and raising any potential problems with the White House at the
time it forwarded the attendance list to the Office of
Political Affairs.12 Although the evidence presented
to the Committee demonstrates that the DNC staff did, on
occasion, raise such questions with the White House, problems
arose when the DNC did not raise questions about certain events
or individuals with White House officials.13
According to Karen Hancox, the Deputy Director of the White
House Office of Political Affairs, the DNC normally forwarded
the list of proposed attendees for DNC sponsored events via
facsimile the night before the event.14 Hancox
testified that the lists did not contain information about past
or promised contributions by the invitees,15 and
that her office generally did not conduct an independent
assessment of the individuals for general appropriateness
unless an issue about a particular individual or event was
raised by the DNC staff.16
If an issue was raised by the DNC, Hancox testified that
her office would seek additional information on the matter from
the NSC or other knowledgeable White House staff.17
Hancox testified that she made approximately 12 such inquiries
of the NSC.18 She also testified that her office
strictly adhered to the NSC's response regarding whether there
may be any negative implications if a particular person entered
the White House or attended a DNC event with the President or
Vice President. Hancox testified that, ``If [the NSC] said no,
it was no.'' 19 The White House and the NSC made
these determinations on an event by event basis, and did not
compile a list of individuals who had previously been denied
access to DNC events.
Judith Spangler, a White House career employee testified
that during her 18-year tenure, administrations have handled
invitations to RNC and DNC events at the White House in the
same way that the current Administration handled similar
invitations from 1993 to 1997.20
Ultimately, from 1993 through 1996, the procedures employed
by the White House Office of Political Affairs permitted DNC
staff to largely determine on its own who would attend White
House events organized and sponsored by the DNC.21
Unfortunately, the DNC did not have an adequate system of
checking the appropriateness of individuals attending events
with the President or Vice President and also did not raise
questions about certain individuals or events that would have
permitted the White House or the NSC to provide input on
whether such attendees were advisable. For details regarding
the specific incidents that derived from this system, see
Chapters 25, 30 and 31 of this Minority Report.
In 1997, both the DNC and the White House implemented
policies to formalize their procedures for assessing potential
guests at most DNC sponsored events. The DNC now requires that
all individuals invited to DNC-sponsored events at the White
House, or other DNC events where the President, Vice President
or First Lady are in attendance, must be assessed and screened
through the DNC's Compliance Division before their names are
forwarded to the White House.22 The DNC also
prohibits adding proposed guests to any event less than 24
hours before the event is scheduled to occur, and prohibits
attendance if an individual is not legally permitted to make a
personal contribution to the DNC, unless he or she is an
immediate family member of an individual who is permitted to
contribute to the DNC.23
The White House also formalized screening procedures in
1997 which require White House staff to assess individuals the
DNC proposes to invite to White House events.24
These new procedures are addressed below.
THE NATIONAL SECURITY COUNCIL
The National Security Council serves as the chief advisory
institution to the President on matters relating to foreign
policy and national security, coordinating foreign policy
activities throughout the Administration.25 One
responsibility of the NSC is to organize official meetings
between the President and foreign officials and other
individuals in order to advance the foreign policy goals of the
Administration it serves.26 These events are
carefully planned and organized by NSC staff.27
The NSC's expertise in foreign policy has long been tapped
by White House staff when other events are planned that involve
the President meeting with outside individuals.28
Although the NSC does not provide information about the
physical risk or general appropriateness of the individuals who
come in contact with the President, it does provide, when
requested, information about any foreign policy that might be
implicated by such contact.29
On September 11, 1997, the Committee took public testimony
of Samuel R. Berger, National Security Advisor to President
Clinton since March of 1997. The Committee explored the NSC's
procedures for responding to requests for information from
other White House staff regarding DNC-organized events. The
evidence presented to the Committee established that from 1993
to 1997, the NSC's procedures in this regard followed those of
previous administrations: the NSC appropriately responded to
requests when they were made, but no formal structure for
assessing DNC attendees was in place. During its investigation,
the Committee also learned that in June 1997, the White House
established a formal structure to assess individuals the DNC
proposes to attend White House events where the President or
Vice President will be in attendance.
Previous NSC procedures
The NSC's primary function is to coordinate U.S. foreign
policy for the President. As a result, the NSC and its staff is
typically not aware of, or responsible for, meetings or events
that are organized by the DNC, or any other entity unrelated to
foreign policy. From 1993 to 1997, the NSC did, on occasion,
assist in providing information about certain individuals who
were scheduled to attend DNC events. However, the NSC's
participation was sparked only when the White House staff
informed the NSC of an event or specified an individual
scheduled to attend an event and asked for information about
any possible effect on foreign policy.30
These contacts between White House staff and the NSC were
ad hoc in nature and were largely driven by the White House
staff's attempt to obtain information relevant to an upcoming
DNC event. Typically, White House staff directly contacted the
NSC staff person who was known to have the relevant expertise
to provide the information sought. These contacts were
facilitated by the fact that the NSC has a relatively small
number of employees divided into geographic areas of
expertise.31 Thus, White House staff often called or
sent e-mail messages to Robert Suettinger, NSC's Director of
Asian Affairs, to seek information about issues relating to
events or individuals that may have an impact on U.S. foreign
policy toward Asian countries.
Berger explained to the Committee that this unstructured
system within the White House and the NSC had been carried over
from earlier practices of previous administrations. Berger
testified that when he entered the Administration, the NSC
procedures for providing information about non-NSC events were
not formalized or structured, and that he had understood that
these procedures dated back at least to the Nixon
Administration.32 Berger also testified that he has
studied a number of historical aspects of the NSC
practices,33 which included speaking to several
former National Security Advisors, and confirmed his
understanding that this NSC practice had been in place for
several administrations.34
Berger also explained that this unstructured system is
partly a result of the fact that the NSC is not the ultimate
decision-maker on questions of access to the White House
complex or to the President.35 Although the NSC
performs important foreign policy functions for the President,
Berger testified that the NSC's practice in assessing access to
the President most often takes the form of providing
information to White House staff, whose responsibility it is to
make a final access determination after consideration of that
information.36 On rare occasions, Berger explained
that the NSC would actually make a recommendation that an
individual not meet with the President. According to Berger,
when the NSC issued such recommendations, they were accepted by
the White House staff.37 Ultimately, Berger
explained that it is the White House staff that is responsible
for determining who sees the President.38
Berger also testified that from 1993 to 1997, NSC vetting
of non-NSC events was event-driven in that inquiries arose in
the context of a specific event.39 Once the event
was over, no ongoing log or record of the NSC's advice or
determinations was maintained.40 These procedures,
when combined with the Office of Political Affair's practice of
not independently assessing individuals and the DNC's decision
to invite a few large contributors to White House events
despite recommendations that they not attend, were responsible
for such incidents as Roger Tamraz's attendance at DNC events
even after NSC staff had recommended against it.41
See Chapter 30 of the Minority Report.
Current NSC procedures
Based on the unstructured systems of the DNC and the White
House Office of Political Affairs, the NSC did not always
receive information about DNC events that enabled it to provide
information or recommendations about the attendees. As a
result, there were questions raised about the NSC's role in
vetting non-NSC events and about how certain individuals were
permitted to attend small gatherings with the
President.42
Berger testified that when asked to provide information,
the NSC acted appropriately and that the NSC functioned in a
nonpartisan manner.43 He also explained that in
March of 1996, in anticipation of the upcoming election
activities, the NSC issued a memorandum to all NSC staff that
instructed them to treat requests and contacts with individuals
from political organizations as they would any other outside
individual.44
However, Berger testified that there were structural
problems with the NSC vetting procedures and that formal
procedures were needed.45 Berger explained that part
of the impetus for establishing formal procedures was to
protect NSC officials, who had appropriately responded to
requests for information from the White House, but did not have
a structure in place to explain what had been
done.46 He also stated that although a smallnumber
of attendees at DNC events with the President generated controversy in
1996,47 he had seen no adverse effect on U.S. foreign
policy.48
On January 21, 1997, Erskine Bowles, Chief of Staff to the
President, requested that the NSC formulate and implement
guidelines for vetting non-NSC meetings and events.
49 From January to June 1997, Berger consulted with
counsel, staff and former National Security Advisors about
vetting procedures. He talked to former National Security
Advisors Brent Scowcroft, Henry Kissinger and Zbigniew
Brzezinski, who confirmed for him that the ``ad hoc'' structure
was the way it had been done during their tenures.50
On June 13, 1997, Berger issued a memorandum, setting forth a
formal structure for NSC vetting.51 The new
procedures require all relevant inquiries to go to one
individual at the NSC and that tracking and follow-up
procedures be implemented.52 In support of this
memorandum, Bowles has instructed everyone at the White House
to forward relevant questions to this particular
individual.53 Finally, all requests for meetings
with NSC staff are now forwarded to the Deputy National
Security Advisor, who routes them to the NSC staff for their
evaluation as to the appropriateness of the
meeting.54 In routing such requests, the Deputy NSA
is required to make every effort to remove ``any information
indicating the individual's partisan political support or
opposition to the Administration.'' 55
Other issues
During the 1996 presidential race, while Berger was Deputy
National Security Advisor, he attended several campaign
strategy meetings held in the White House. The Committee
explored this issue during Berger's public testimony on
September 11, 1997.
The Committee learned that Berger's attendance at campaign
strategy meetings was not unprecedented.56 President
Bush's National Security Advisor, Brent Scowcroft, was reported
to be a regular attendee at campaign strategy meetings during
the 1992 election.57 In 1992, Scowcroft also
traveled to Dallas, Texas as part of a campaign team assigned
to convince Ross Perot not to run for President. The New York
Times noted that ``some historians said that Mr. Scowcroft's
journey to Dallas would be little different from appearing on a
political talk show or addressing a party convention. Others
said his role debased the post of National Security Advisor.''
58
Berger testified that, like Scowcroft, he had attended
campaign strategy meetings during his President's election
year, but noted that he had not engaged in other political
activities in support of the President's re-election
campaign.59 He explained his attendance at the
strategy meeting by stating that he ``. . . wanted to make sure
that in the discussion of a campaign . . . someone was there
that was familiar with the President's foreign policy record so
that if an ad mentioned a trade position, or a leadership in
the world position there was someone there who knew whether it
was accurate.'' 60 Berger also testified that his
attendance at the meetings was ``partly dissuasive[], to make
sure that there wasn't discussion of political issues in any
serious way in those meetings, and to make sure there was no
distortion of the President's foreign policy record.''
61 Berger explained that it was his opinion that ``.
. . there ought to be somebody from the foreign policy side of
the shop that had some general familiarity with the campaign,
its basic themes, its basic message, because the President in
1996 was both President and candidate.'' 62
Berger also addressed the nature of the campaign strategy
meetings. He testified that the weekly gatherings were not
``small, close-hold decision making meetings'' where ``the
small inner sanctum ma[de] decisions,'' but instead were large
gatherings attended by ``the President and the Vice President,
Mr. Panetta, senior domestic policy people, senior people on
the White House staff on communications[, and a] good part of
the senior White House staff. . . .'' 63 Berger
characterized the meetings as ``basically a more general
briefing on where the campaign was and where it was headed for
the next week.'' 64 There was no evidence presented
to the Committee that Berger's attendance at these meetings was
anything but appropriate. Berger apparently functioned as an
observer at the meetings, seeking to ensure that foreign policy
issues were handled in an appropriate and objective manner.
On September 19, 1995, Robert Suettinger, NSC Director of
Asian Affairs, met with Hong Kong businessman Eric Hotung to
discuss Hotung's opinions on issues relating to Hong Kong,
Taiwan, and China.65 Hotung is a businessman and the
head of the Hotung Institute, which has offices in Hong Kong,
New York and Washington, D.C. The primary purpose of the Hotung
Institute, according to documents presented to the Committee,
is to promote a better understanding between the United States
and China.66 Berger testified that meetings between
NSA staff and outside individuals with insights on foreign
policy issues are common and helpful in assisting the NSC to
analyze foreign policy issues.67
On September 20, 1995, DNC Chairman Donald Fowler sent a
memo to Douglas Sosnik, White House Director of Political
Affairs, requesting that a meeting be arranged between National
Security Advisor Anthony Lake or Deputy NSA Berger and Mr. and
Mrs. Eric Hotung.68 Berger testified that he
requested Stanley Roth, the NSC's Senior Director for Asian
Affairs, to review this request and advise him on whether it
would be appropriate to meet with Hotung, and was advised that
a brief meeting and photograph would be ``fine.'' 69
According to documents presented to the Committee, the meeting
lasted five minutes and took place on October 4.70
During the public hearings, questions were raised regarding
whether the DNC sought to facilitate Hotung's brief meeting
with Berger in anticipation of a financial contribution from
Mrs. Hotung, an American citizen. The evidence before the
Committee, however, does not support the conclusion that Mrs.
Hotung made her contributions to the DNC in exchange for a
meeting between her husband and the NSC or that Berger agreed
to the meeting in exchange for Mrs. Hotung's contribution.
First, documents produced to the Committee indicate that Mrs.
Hotung had already made a commitment to contribute $100,000 by
September 14, and that the DNC expected to receive her check in
mid-September, several weeks before the October 4 meeting with
Berger took place.71 Second, Berger testified that
at the time of the meeting, he ``was not aware that there was a
Mrs. Hotung or of her financial relationship to the DNC or of
Mr. Hotung's financial relationship to the DNC.'' 72
Berger also testified that he was ``absolutely'' certain that
no one asked him to meet with Mr. Hotung in order to facilitate
a contribution to the Democratic Party.73
Berger explained that Hotung ``has had a lot of contact
with previous Presidents and with a number of prominent Members
of the Senate. He's the head of a very well regarded institute
on China [and was advised by staff that] he is probably more
knowledgeable about China and Hong Kong affairs than almost
anybody they've talked to.'' 74 Berger testified
that he had ``no reason to believe that he [Hotung] would
misuse a photo.'' 75 Indeed, the Committee learned
that Hotung has never ordered or picked up the
photo.76 Finally, Berger testified that the brief
meeting did not have an impact on foreign policy, stating that
``in no situation'' could he ``perceive in any way that any
campaign contributor or campaign fund-raising consideration had
any influence on [foreign] policy. I say that categorically.''
77
CONCLUSION
The appropriate level of scrutiny to be applied to
individuals who are invited to attend events with the President
is a difficult issue which asks government officials to balance
concerns of security and propriety against the desire to have a
White House that is accessible to its citizens and open to a
diversity of viewpoints. From 1993 to 1997, the combined DNC
and White House procedures for assessing DNC events was
unstructured and failed to prevent certain individuals from
attending events, resulting in controversies publicized in
1996. The inadequacies have been addressed within the DNC and
the White House, both of which have implemented guidelines to
ensure appropriate review of future DNC events and attendees.
FOOTNOTES
\1\ Judith Spangler deposition, 5/9/97, pp. 39-40.
Q: In the Reagan-Bush White House, did the Office of Political
Affairs from time to time provide lists of people to be invited?
A: Yes.
Q: Did it do so frequently?
A: May I explain?
Q: Yes.
A: That for almost every event, different offices within the
White House submit names to the social secretary; names of people that
they would like to have invited to a dinner or a luncheon or some type
of reception, or an event.
Q: Has that been so in every White House in which you have
worked?
A: Yes.
Q: That for events, receptions, dinners, lunches, events of every
kind, the Office of Political Affairs in those White Houses has
submitted lists of invitees?
A: Yes.
Q: So that the Clinton-Gore White House is not the first White
House which has done that?
A: No.
Q: In earlier administrations did it occasionally occur that the
Republican National Committee would supply names of invitees?
A: Yes, they did.
Q: Was that so in the Reagan-Bush White House?
A: Yes.
Q: Was it so in the Bush-Quayle White House?
A: Yes.
Footnotes at end of Chapter 29.
\2\ Exhibit 2000M: Affidavit of Colleen B. Callahan, 9/9/97, para.
4(D).
\3\ Exhibit 2000M: Affidavit of Colleen B. Callahan, 9/9/97, para.
4(D).
\4\ Exhibit 2000M: Affidavit of Colleen B. Callahan, 9/9/97, para.
3.
\5\ Exhibit 2000M: Affidavit of Colleen B. Callahan, 9/9/97, para.
4(E).
\6\ Exhibit 2000M: Affidavit of Colleen B. Callahan, 9/9/97, para.
4(H).
\7\ Exhibit 2000M: Affidavit of Colleen B. Callahan, 9/9/97, para.
4(I).
\8\ Exhibit 2000M: Affidavit of Colleen B. Callahan, 9/9/97, para.
3.
\9\ Exhibit 2000M: Affidavit of Colleen B. Callahan, 9/9/97, para.
4(B).
\10\ Exhibit 2000M: Affidavit of Colleen B. Callahan, 9/9/97, para.
3.
\11\ Karen Hancox deposition, 6/10/97, pp. 217-21.
\12\ Richard L. Sullivan deposition, 6/4/97, p. 106.
\13\ Richard L. Sullivan deposition, 6/4/97, pp. 105-108; Karen
Hancox deposition, 6/10/97, pp. 58-59.
\14\ Karen Hancox deposition, 6/9/97, pp. 52-53.
\15\ Karen Hancox deposition, 6/10/97, pp. 217-21.
\16\ Karen Hancox deposition, 6/9/97, pp. 52-53.
\17\ Karen Hancox deposition, 6/10/97, p. 51; see also Doug Sosnik
deposition, 6/20/97, pp. 167-68, 184; Cheryl Mills deposition, 8/19/97,
pp. 147-49.
\18\ Karen Hancox deposition, 6/9/97, p. 78.
\19\ Karen Hancox deposition, 6/9/97, p. 80.
\20\ Judith Spangler deposition, 5/9/97, pp. 39-40.
\21\ Karen Hancox deposition, 6/10/97, pp. 9-10.
\22\ Exhibit 1073: New DNC Compliance Procedures and Fundraising
Manual.
\23\ Exhibit 1073: New DNC Compliance Procedures and Fundraising
Manual.
\24\ Exhibit 1072: Memorandum from Erskine Bowles to All Executive
Office of the President Staff, 1/21/97.
\25\ Samuel Berger, 9/11/97 Hrg. P. 4
\26\ Staff interview with Samuel Berger, 8/28/97.
\27\ Staff interview with Samuel Berger, 8/28/97.
\28\ Staff interview with Samuel Berger, 8/28/97.
\29\ Staff interview with Samuel Berger, 8/28/97.
\30\ Staff interview with Samuel Berger, 8/28/97.
\31\ Samuel Berger, 9/11/97 Hrg. P. 33; Staff interview with Samuel
Berger, 8/28/97.
\32\ Samuel Berger, 9/11/97 Hrg. P. 6; Staff interview with Samuel
Berger, 8/28/97.
\33\ Samuel Berger, 9/11/97 Hrg. P. 5; Staff interview with Samuel
Berger, 8/28/97.
\34\ Samuel Berger, 9/11/97 Hrg. Pp. 8; Staff interview with Samuel
Berger, 8/28/97.
\35\ Staff interview with Samuel Berger, 8/28/97.
\36\ Samuel Berger, 9/11/97 Hrg. P. 6; Staff interview with Samuel
Berger, 8/28/97.
\37\ Staff interview with Samuel Berger, 8/28/97.
\38\ Staff interview with Samuel Berger, 8/28/97.
\39\ Samuel Berger, 9/11/97 Hrg. P. 63; Staff interview with Samuel
Berger, 8/28/97.
\40\ Samuel Berger, 9/11/97 Hrg. P. 63; Staff interview with Samuel
Berger, 8/28/97.
\41\ Samuel Berger, 9/11/97 Hrg. Pp. 63-64.
\42\ Washington Post, 4/2/97.
\43\ Staff interview with Samuel Berger, 8/28/97.
\44\ Samuel Berger, 9/11/97 Hrg. Pp. 33-35; Exhibit 1074:
Memorandum from National Security Advisor Anthony Lake to all NSC
staff, 3/96, p. 4, para. 4(d).
\45\ Staff interview with Samuel Berger, 8/28/97.
\46\ Samuel Berger, 9/11/97 Hrg. P. 9.
\47\ Samuel Berger, 9/11/97 Hrg. P. 71.
\48\ Samuel Berger, 9/11/97 Hrg. Pp. 8, 43, 70.
\49\ Exhibit 1072: Memorandum from Erskine Bowles to all Executive
Office of the President Staff, 1/21/97.
\50\ Staff interview with Samuel Berger, 8/28/97.
\51\ Exhibit 1071: Memorandum from Samuel Berger to all NSC Staff,
6/13/97.
\52\ Exhibit 1071: Memorandum from Samuel Berger all NSC Staff, 6/
13/97; Samuel Berger, 9/11/97 Hrg. P. 29.
\53\ Staff interview with Samuel Berger, 8/28/97.
\54\ Exhibit 1071: Memorandum from Samuel Berger to all NSC Staff,
p. 4, 6/13/97.
\55\ Exhibit 1071: Memorandum from Samuel Berger to all NSC Staff,
p. 4, 6/13/97.
\56\ Senator Glenn, 9/11/97 Hrg. Pp. 30-32.
\57\ Exhibit 2002M: News reports discussed during Committee
Hearing, 9/11/97 (reporting that former National Security Advisor Brent
Scowcroft attended campaign strategy meetings and engaged in other
political activities during the 1992 presidential race).
\58\ New York Times, 9/28/92.
\59\ Samuel Berger, 9/11/97, Hrg. P. 32.
\60\ Samuel Berger, 9/11/97, Hrg. P. 18.
\61\ Samuel Berger, 9/11/97 Hrg. P. 18.
\62\ Samuel Berger, 9/11/97 Hrg. P. 18.
\63\ Samuel Berger, 9/11/97 Hrg. P. 19.
\64\ Samuel Berger, 9/11/97 Hrg. P. 19.
\65\ Exhibit 1077: Memorandum from James W. Symington to
Appointment Scheduler, 9/13/95.
\66\ Exhibit 1081: Memorandum from Don Fowler to Doug Sosnik via
Karen Hancox, 9/20/95, DNC 3140633.
\67\ Samuel Berger, 9/11/97 Hrg. Pp. 36-37, 42-43.
\68\ Exhibit 1081: Memorandum from Don Fowler to Doug Sosnik via
Karen Hancox, 9/20/95, DNC 3140633.
\69\ Exhibit 1082: E-mail from Stanley O. Roth to Sandy Berger, 10/
3/95.
\70\ Exhibit 1083: Appointment Schedule for Samuel Berger, 10/04/
95, SUP 003038.
\71\ Exhibit 2001M: Memorandum from DNC Chairman Fowler to David
Mercer, 9/14/95; Minority Counsel, 9/11/97 Hrg. Pp. 41-42; Samuel
Berger, 9/11/97 Hrg. Pp. 41-42.
\72\ Samuel Berger, 9/11/97 Hrg. Pp. 39-40.
\73\ Samuel Berger, 9/11/97 Hrg. P. 40.
\74\ Samuel Berger, 9/11/97 Hrg. Pp. 23-24.
\75\ Samuel Berger, 9/11/97 Hrg. P. 24.
\76\ Sen. Lieberman, 9/11/97 Hrg. P. 66.
\77\ Samuel Berger, 9/11/97 Hrg. P. 43.
PART 5 FUNDRAISING AND POLITICAL ACTIVITIES OF THE NATIONAL PARTIES
AND ADMINISTRATIONS
Chapter 30: Roger Tamraz
Roger E. Tamraz is an American businessman involved in
investment banking and international energy projects. In the
mid-1990s, he sought to become a ``dealmaker'' in an oil
pipeline project that would cross the Caspian Sea region of
Central Asia. In the hope of obtaining U.S. Government support
for his project, Tamraz used his past relationship with the
Central Intelligence Agency, met with mid-level U.S. Government
officials, and made political contributions to the Democratic
Party.
The Committee's investigation focused on whether officials
of the Central Intelligence Agency, the National Security
Council, the Democratic National Committee, the White House, or
the Department of Energy improperly promoted Tamraz's pipeline
proposal or gave him access to high-level government officials;
why Tamraz was permitted to attend DNC events in the White
House when staff had recommended that he not have any contact
with high-level officials; and whether U.S. policy on the
Caspian Sea pipeline changed as a result of Tamraz's political
contributions or access to government officials.
findings
(1) Roger Tamraz openly bought access from both political
parties.
(2) Tamraz's attendance at DNC events was based on his
political contributions and was unwise given the warnings that
he might misuse such attendance. DNC Chairman Donald Fowler
endorsed Tamraz's attendance at these events, despite early
warnings from DNC staff and opposition from NSC officials and
Vice President Gore's staff.
(3) A Central Intelligence Agency official promoted
Tamraz's pipeline proposal in 1995, despite knowing that the
NSC opposed it.
(4) An Energy Department official promoted additional
political access for Tamraz in 1996, despite knowing that the
NSC and other officials opposed it.
(5) U.S. policy in the Caspian Sea was not affected by
Tamraz's lobbying, political contributions, or presence at DNC-
related events. This policy was solidified in early October
1995 and did not incorporate any aspect of Tamraz's proposal.
overview
Tamraz was born in 1940 in Cairo, Egypt. He attended the
American University of Cairo, Cambridge University, and Harvard
Business School. In 1967, Tamraz went to work for the
investment firm of Kidder, Peabody & Co., first in New York
City, then in Beirut. He left in 1973 to establish his own
Beirut-based investment-banking firm, the First Arabian
Corporation. In the mid-1980s, Tamraz was chairman of Bank Al-
Mashrek, Lebanon's second largest bank, as well as the head of
Jet Holdings, which owned TransMediterranean Airway and Middle
East Airlines. In 1989, Tamraz left Lebanon after being charged
by the Lebanese government with embezzlement and negligence in
connection with the failure of his Bank Al-Mashrek. He moved to
the United States, became an American citizen, and founded
TAMOIL, an oil company. Tamraz is currently President of Oil
Capitol Limited.
Beginning as early as 1973, Tamraz's business ventures have
received significant media coverage. In the 1980s, Tamraz
learned the value of making political contributions when, as a
legal permanent U.S. resident living in Beirut, he became a
contributor to the Republican Party. As a result, he was
recommended by the chairman of the Republican National
Committee for a position with the Reagan Administration. Since
that time, Tamraz was also reported to have had significant
contact with the Central Intelligence Agency (``CIA''), which
apparently continued until shortly before this Committee's
proceedings began in 1997.
In the 1990s, Tamraz, who was then living in New York City
and Paris, was promoting a pipeline venture in the Caspian Sea
region. In May and June of 1995, Tamraz met with many foreign
officials and mid-level U.S. government officials, generally
attempting to use every possible avenue to gain support for his
pipeline proposal. In June 1995, the U.S. officials informed
Tamraz that his proposal would not gain Administration support.
Beginning that same month, a mid-level CIA official began to
advocate Tamraz's pipeline proposal to the NSC, despite knowing
that the NSC opposed it.
In July 1995, Tamraz began to contribute to the Democratic
Party and concurrently to request official meetings with
higher-level government officials. Tamraz never obtained an
official meeting with the President or Vice President. Tamraz
did, however, attend several DNC events where the President,
Vice President or other Administration officials were present,
despite opposition within the National Security Council and the
Vice President office's to Tamraz's contact with high-level
officials. DNC Chairman Donald Fowler supported Tamraz's
attendance at DNC events, despite being aware of the objections
to his attendance within the NSC and the Vice President's
office.
In April 1996, a mid-level Department of Energy official
also promoted Tamraz's efforts to gain access to President
Clinton during a telephone conversation with an NSC official.
Despite all of these efforts, Tamraz was not successful in
obtaining U.S. Government support for his Caspian Sea pipeline
proposal. In fact, the proposal supported by the U.S.--a
contract among several foreign governments and oil companies--
was signed on October 7, 1995, and did not involve Tamraz or
his proposal.
The Committee investigated these issues by conducting
numerous depositions and interviews, reviewing documents, and
hearing two days of public testimony.\1\
---------------------------------------------------------------------------
Footnote at end of Chapter 30.
---------------------------------------------------------------------------
1970-1990: TAMRAZ'S BUSINESS VENTURES, DEALINGS WITH THE CIA AND
POLITICAL CONTRIBUTIONS
Business ventures
In 1973, Fortune magazine reported that the Egyptian
government had finally decided to build a pipeline from the
Gulf of Suez to the Mediterranean Sea.2 According to
Fortune, ``What was most startling about the announcement was
that the Sadat government gave the job, not to the eleven-
nation consortium with which it had been negotiating for three
years, but to the Wall Street firm of Kidder, Peabody & Co.''
3 The magazine highlighted the role of Tamraz, then
34 and Kidder's vice president in Beirut, as the individual
responsible for negotiating the deal.4 The deal was
reportedly worth $345 million and Tamraz received a five
percent share--worth $15 million at the time.5
In 1974, Tamraz established the First Arabian Corporation,
which was a syndicate made up of wealthy Kuwaiti and Saudi
Arabian investors.6 In 1978, Newsweek reported that
Tamraz ``has been involved in some of the most widely
publicized international business transactions of recent
years.'' 7 Tamraz himself summarized his approach:
``I'm interested in things they say can't be done.''
8 Even then, Tamraz had detractors who saw him ``as
a promoter who hasn't delivered the goods.'' 9
Reported contacts with the CIA
According to Tamraz, it was during the early to mid-1970s
that the CIA first turned to him for advice regarding the oil
crisis.10 Thereafter, Tamraz apparently became a
regular unofficial contact of the CIA--``the kind of guy who
knew everybody and you had lunch with him every couple of
months,'' according to one former U.S. intelligence
official.11 Tamraz testified that since 1973, he has
been in constant contact with CIA officials on a voluntary
basis, estimating that in the past 25 years, he has probably
had contact with roughly 20 to 25 different CIA
employees.12
Tamraz testified that in the 1980s, his contacts with the
CIA continued.13 According to Tamraz and press
reports, then-CIA Director William J. Casey called on Tamraz
after the Israeli invasion of Lebanon in 1982.14
Casey reportedly asked Tamraz to intercede with Prime Minister
Menachem Begin because Casey was frustrated with the slow pace
of U.S.-led negotiations and hoped that Tamraz could use his
high-level contacts to accelerate an Israeli withdrawal
fromLebanon.15 Throughout these years, Tamraz testified that
he has also hired former CIA employees, enhancing his connections with
the agency.16
RNC's recommendation for a Reagan administration position
Tamraz began to make political contributions to the
Republican Party in the 1980s. He testified that he contributed
enough money to the RNC to qualify as a Republican
Eagle.17 Federal Election Commission records show
that Tamraz gave $32,000 to the Republican Party between 1981
and 1992, but Tamraz told Congressional Quarterly that he
thought he gave more than that, possibly in ``soft money''
donations, which were not recorded at the FEC until
1991.18 Tamraz testified that he received a personal
thank-you letter from President Ronald Reagan'' 19
and an NSC official told the Committee that Tamraz had met
twice with President Reagan.20
In addition, then-RNC Chairman Frank Fahrenkopf, Jr., sent
a letter on behalf of Tamraz to Robert Tuttle, Reagan White
House Director of Presidential Personnel. Fahrenkopf
recommended Tamraz for a position in the Reagan Administration,
``on a committee or board connected with banking or petroleum,
specifically relating to Arab countries.'' 21 In
support of this recommendation, Fahrenkopf not only pointed out
that Tamraz was from Beirut, he also stated that ``Mr. Tamraz
is an Eagle, and a strong supporter of the Administration.''
Fahrenkopf then stated generally that Tamraz has expertise in
banking and the petroleum industry.22 Tuttle replied
to Fahrenkopf thanking him for his ``letter in [sic] behalf of
Roger Tamraz'' and requesting that he forward Tamraz's resume
for consideration.23
Tamraz was never appointed to a position in the Reagan
Administration, but the 1985 Fahrenkopf letter demonstrates
that the recommendation was based on his political
contributions. Upon learning that Tamraz had produced a copy of
the letter to the Committee, Fahrenkopf stated in a letter to
the Committee that during his tenure at the RNC he made many
recommendations for similar appointments, although he does not
believe he actually signed the Tamraz letter.24
Tamraz leaves Lebanon after embezzlement charges
Tamraz testified that in late 1988, forces hostile to
Tamraz came to dominate the Lebanese political
scene.25 At that time, a run on Tamraz's Al-Mashrek
Bank forced its collapse. Tamraz fled the country after
claiming to have been kidnapped and later released in return
for a multimillion-dollar ransom.26 Subsequently,
Lebanese officials brought charges against him for embezzlement
and mismanagement.27 Tamraz testified that these
charges were politically motivated and were largely a result of
his contacts with Israel.28 Tamraz also testified
that he was found innocent of any crime.29 Lebanese
authorities have sought his extradition through Interpol, but,
according to Tamraz, ``a Lebanese court-appointed authority
determined in 1990 that there was not criminal activity''
relating to his bank.30 In 1992, however, the
Lebanese authorities convicted him in absentia and there is an
outstanding Interpol warrant for his arrest.31
1994-1995: the commerce department
During the Committee's investigation, allegations surfaced
that the Clinton Administration's Commerce Department had
selected individuals for Department trade missions based on
their support of the Democratic Party. Although these
allegations were not supported by the evidence presented to the
Committee, see Chapter 26, the Committee obtained documents
regarding the Department's contacts with Tamraz and his
company, Oil Capital Limited. Documents and deposition
testimony reveal that Tamraz was twice rebuffed by the
Department of Commerce.
Prior to any political contributions to the Democratic
Party, which were first made in July of 1995, Tamraz submitted
an application to attend a 1994 trade mission with Secretary
Ronald Brown.32 Tamraz's name was initially placed
on a list of potential participants, but was later removed by
the Office of the General Counsel after its vetting process
discovered information on Lexis-Nexis that disqualified
Tamraz.33 Tamraz testified that he was told that he
would not be invited to the trade mission because the
department considered him unacceptable. Tamraz assumed that he
was rejected because of the publicized embezzlement charges
against him.34
In October of 1995, Oil Capital Limited submitted a request
to the Department seeking support for its attempt to purchase
an energy concern in Hungary. The Commerce Department rejected
this request as well. The Department's rejection was based
again on Tamraz's questionable background and on uncertainties
regarding Oil Capital's status as an American
company.35
1995: the caspian sea pipeline
U.S. policy on the Caspian Sea pipeline
The United States has pursued a consistent pipeline policy
throughout most of the world: the support of multiple pipelines
for the transit of energy resources in order to diversify
political and economic risks and enhance energy
security.36 U.S. policy in the Caspian Sea region of
Central Asia was established in early 1995 and has two primary
objectives: (1) support for multiple pipeline routes and (2)
insistence that pipeline contracts be established and operated
pursuant to commercially accepted principles.37
Sheila Heslin, the NSC official in charge of implementing the
U.S. Caspian Sea pipeline policy from April 1995 to November
1996, testified that in June 1995 the U.S. policy in the
Caspian Sea region was ``the development of multiple pipelines
on commercially viable international terms.'' 38
The crucial period for the implementation of U.S. policy
was from the spring of 1995 to October 7, 1995.39
During this time, U.S. and foreign officials, an international
consortium of foreign governments and private oil companies, as
well private businessmen like Tamraz were in a contest to
determine early pipeline routes and the financial terms for
constructing and operating those routes.40 Also
during this time, Heslin chaired an interagency group on
Caspian Sea pipeline policy, which according to Heslin,
``coordinated policy very carefully . . . . We were very
concerned to make sure U.S. policy was tightly coordinated
because we feared that different agencies could easily be
played off against each other.'' 41 Tamraz's
pipeline proposal and his activities in the Caspian Sea region
was a subject of discussion within the interagency group.
In the spring of 1995, the interagency group was concerned
because Tamraz apparently was traveling in the Caspian Sea
region attempting to become a dealmaker between governments and
oil companies who hoped to be involved in the construction of
an oil pipeline in the region.42 The group had also
heard that Tamraz was calling his pipeline proposal a ``peace
pipeline'' because he believed that his proposed route would
foster peace in the region. The group understood, however, that
the real incentive behind Tamraz's pipeline proposal was the
fact that he planned to retain five percent of the revenues in
exchange for forging a deal. According to Heslin, Tamraz's
proposal to become a dealmaker, if successful, would have
resulted in personal profit to Tamraz of approximately $125
million.43
The interagency group determined that Tamraz's proposal to
become a ``dealmaker'' in the Caspian Sea pipeline project was
contrary to U.S. policy, which sought commercially viable
contracts without the intervention of dealmakers.44
According to Heslin, the group nonetheless decided ``that as an
American, Roger Tamraz deserved a hearing in front of his
Government, but that we should do so at a mid-level initially
and then assess.'' 45 Agencies officials thereafter
met with Tamraz to discuss his proposal and the CIA also became
involved in the process.
Ultimately, on October 7, 1995, a contract was signed that
provided for multiple early pipeline routes pursuant to
commercially viable terms, thereby implementing U.S.
policy.46 Heslin testified that the success of U.S.
policy was due in large part to the coordination within the
executive branch of the Government, the importance placed on
the policy by National Security Advisors Anthony Lake and
Samuel R. Berger, and by President Clinton himself, who called
President Heidar Aliyev of Azerbaiijan ``at the key moment'' in
the negotiations.47
The project announced on October 7, 1995 did not
incorporate any aspect of Tamraz's proposal despite Tamraz's
efforts to become part of the project.48 The
Committee investigated some events surrounding the Caspian Sea
pipeline issue, focusing on Tamraz's attempts to become part of
the project.
May-June 1995: Meetings with executive branch officials
In May and June of 1995, several mid-level executive branch
officials met with Tamraz to discuss his proposal. During these
meetings, Tamraz sought to persuade the officials to support
or, at least, not object to, his ``peace pipeline''
proposal.49 This series of meetings was routine and
proper, and occurred prior to any political contribution by
Tamraz to the Democratic Party.50 Testimony
establishes that the officials met to listen to Tamraz's
proposal as they did with many private individuals and
businesses. No evidence was presented to the Committee that the
agencies offered support for Tamraz's commercial
interests.51
One of the meetings between Tamraz and executive branch
meetings was with Sheila Heslin. According to Heslin, the
meeting was scheduled after Ed Pechous, a former CIA official
employed by Tamraz, called Heslin ``repeatedly'' requesting
that she meet with Tamraz.52 Heslin agreed to meet
with Tamraz and scheduled the meeting for June 2, 1995. Heslin
testified that before the meeting, she ``tasked the interagency
[group] to basically check out the representations he had made
at the various departments with regard to support from various
entities and governments.'' 53 After receiving
information from a variety of sources, Heslin discovered that
Tamraz's representations ``did not check out.'' 54
Heslin had a 20-minute meeting with Tamraz and Pechous on
June 2, 1995. According to Heslin, she explained U.S. policy
and ``asked [Tamraz] a bunch of tough questions,'' including
why he had misrepresented his support and whether he was
seeking exclusive rights.55 Heslin testified that
she did not get very satisfactory answers and that Tamraz told
her that he was seeking to charge five percent of the overall
costs of the deal. Heslin explained that that ``was the
clincher'' against his deal, because such deals were against
U.S. policy and were not ``economically viable.'' 56
Tamraz testified that during this meeting, Heslin was in
``listening mode'' only, and that she was skeptical of his
proposal, as were the other mid-level officials with whom he
met in May and June.57 According to Tamraz, the mid-
level officials during these meetings in the spring of 1995
gave him ``the same song.'' 58 Tamraz had no other
contact with Heslin or the other agency officials after June
1995.59
Bob of the CIA
In preparation for her June 2 meeting with Tamraz, Heslin
requested information from the CIA's Directorate of
Intelligence (``DI''), the CIA division that analyzes
information.60 Heslin testified that just prior to
her meeting, both a colleague at the CIA's DI and an official
of the CIA's Directorate of Operations (``DO'')--the CIA
division that gathers information, often undercover--told her
that they would be sending her a report.61 The
official from the DO was referred to during Committee
proceedings as ``Bob of the CIA'' in order to protect his
undercover identity. Heslin ``was very surprised'' that the DO
would ``decide[] on its own'' to send a report on Tamraz, when
she had not requested one.62
Heslin did receive two separate CIA reports in May 1995,
prior to her June 2, 1995 meeting with Tamraz--one report was
from the DI and the other was from the DO. Heslin testified
that ``there was a very big difference between the reports.''
63 According to Heslin, the DI report contained
negative information about Tamraz, whereas the DO report,
signed by Bob's supervisor William Lofgrin, ``was almost wholly
positive.'' 64 Heslin testified that she did not
understand this discrepancy.65 This CIA pattern of
the DO providing positive information about Tamraz to the NSC
continued in early June 1995, when Bob began to contact Heslin
and promote Tamraz and his pipeline proposal.
Heslin testified that shortly after her June 2 meeting with
Tamraz, she received a call from Bob of the CIA. During that
call, Bob apologized for the contents of the DO's report,
telling Heslin that his boss Lofgrin (who later went to work
for Tamraz) had ``asked him personally to call [Heslin] and
review his history.'' 66
According to Heslin, Bob knew details about her June 2
meeting with Tamraz, and began to ``rebut every tough
question'' she had posed to Tamraz in that
meeting.67 Heslin testified that Bob ``was
attempting to essentially provide [her] information to ease
[her] concerns on the questions that [she] had raised with
Tamraz.'' 68 Heslin found this ``strange.''
69 Heslin also testified that when talking about
Tamraz, Bob had a real reverence in his voice about some of
Tamraz's past involvement with the CIA.70
Heslin testified that between early June and late October
1995, Bob called her anywhere from three to five times in what
she testified could ``only be characterized as lobbying in
favor of Roger Tamraz.'' 71 Heslin testified that
she was ``astonished'' when Bob told her specific details about
Tamraz's pipeline deal, once even assuring her that the Turkish
government was almost ``on board.'' 72 According to
Heslin, Bob never mentioned Tamraz's political contributions,
and the evidence establishes that Bob's calls began before
Tamraz had begun to contribute to the Democratic Party in July
of 1995.73
Sometime in late August or early September 1995, evidence
presented to the Committee indicates that Bob also contacted
the Vice President's staff to discuss Tamraz.74 At
this time, Tamraz had requested an official meeting with Vice
President Gore and was waiting for a response.75
The last telephone call Heslin received from Bob was in
mid-October, after the Caspian Sea pipeline project had been
signed and U.S. policy had been implemented. During this call,
Heslin recalled that once again Bob urged her to support
Tamraz's deal, stating that it was important that they ``get
Tamraz back on board'' in the region.76
It was also in mid-October 1995 that Bob initiated a
telephone call to Donald Fowler, chairman of the DNC. Bob wrote
in an October 20, 1995 memorandum provided to the Committee
that ``[o]n October 19 Don Fowler called me at the behest of .
. . Roger Tamraz.'' 77 However, during his
deposition, portions of which have been declassified, Bob
testified that in fact he had called Fowler first. Bob
testified that he placed the first call to Fowler on October
18, before Fowler ever contacted him.78 Fowler was
not in, so Bob left his full name with a young man who answered
the phone.79
According to Bob, Fowler returned the call the next
day.80 Fowler testified that he does not have any
memory of this phone call, but according to Bob, Fowler told
him that he understood that Bob was in contact with the Vice
President's office.81 In response, Bob testified
that he informed Fowler that he could not help with a meeting
with the Vice President, referring Fowler to an individual
inside the Vice President's office.82 Bob also
testified that the conversation with Fowler was brief, that he
was working undercover and that he never mentioned his CIA
affiliation.83 Bob also testified that during the
call he was ``not sure that Fowler [knew] who he [was] talking
to.'' 84 (Bob and Fowler spoke one more time, in
mid-December 1995. These calls are both reviewed fully below.)
Bob's last contact with Heslin was at a dinner for federal
and foreign officials in late October 1995. According to
Heslin, after this dinner, Bob ``insisted'' that he drive
Heslin home.85 During the ride, Bob again stated
that he had more important information about Tamraz he wished
to share with her. According to Heslin, it was her view by this
point was that Bob was nothing more than a lobbyist for Tamraz,
and that she did not want any additional
information.86
Although the majority of Bob's deposition testimony remains
classified, it can be generally stated that Bob agreed with
Heslin that he was the one who initiated all contacts with
Heslin. Bob also testified, however, that contrary to Heslin's
testimony, he only provided Heslin with negative information
about Tamraz during those calls. Bob's testimony is contrary to
Heslin's public testimony before the Committee. Based on Bob's
deposition transcript as a whole, the testimony of Heslin,
Lofgrin's positive position and the positive DO reports, Bob's
assertion that he provided only negative information about
Tamraz to Heslin is not credible. Instead, the opposite
conclusion is warranted--that Bob of the CIA lobbied Heslin on
behalf of Tamraz and his pipeline project.
In sum, from June 1995 through October 1995, the evidence
establishes that Bob, then an employee of the CIA's Directorate
of Operations, lobbied the NSC on behalf of Tamraz and his
pipeline proposal. The lobbying began in May of 1995, when Bob
and his boss Lofgrin decided ``on their own'' to send a
positive report about Tamraz to Heslin. Heslin had not
requested this report and found it ultimately to be inaccurate.
Bob's lobbying began before Tamraz had made any political
contributions to the Democratic Party and there is no evidence
that he ever mentioned political contributions to Heslin. Bob's
lobbying seemed driven by a desire to promote the idea that the
U.S. Government should support Tamraz's pipeline deal. Of
significance is the fact that Bob's lobbying ended shortly
after Tamraz had been excluded from the pipeline deal in
October of 1995.
Although the reasons behind Bob's lobbying are unclear, it
is clear that Bob's lobbying was not tied to Tamraz's
involvement with either Fowler or the Democratic Party. The
Committee did not completely resolve these issues and further
investigation of CIA involvement with Tamraz is warranted.
JULY-OCTOBER 1995: CONTRIBUTIONS TO THE DEMOCRATIC PARTY
Contribution history
Tamraz testified quite bluntly about his persistence in
pursuing his business ventures with top officials in the U.S.
government: ``[I]f they kicked me from the door, I will come
through the window.'' 87
Tamraz began to contribute to the Democratic Party in July
1995, after the interagency group had given Tamraz the signal
that his pipeline proposal would not gain Administration
support. Tamraz's first substantial contribution to the
Democratic Party was July 19, 1995 and his last was October 19,
1995.88 Committee documents and FEC records show the
following contributions by Tamraz:
July 19, 1995:
to the DNC Federal Account................................ $20,000
to Virginia Democratic Party.............................. 25,000
to Louisiana Democratic Party............................. 25,000
to Richard Molpus for Governor of Mississippi............. 20,000
August 29, 1995: to Richard Molpus for Governor of Mississippi 5,000
September 10, 1995: to the DNC (for Tamoil Inc.).............. 50,000
October 19, 1995: to Virginia Democratic Party................ 75,000
--------------------------------------------------------------
____________________________________________________
Total: from July to October 1995........................ 220,000
Interestingly, Tamraz made no substantial contributions to
the Democratic Party after October 1995, which was the month
the contract for the Caspian Sea pipeline was signed.
Apparently, the mid-level U.S. officials had stopped Tamraz at
the front door in June of 1995, Bob of the CIA was not able to
help him, and thereafter Tamraz attempted to ``come through the
window'' 89 by way of political contributions.
Indeed, Tamraz testified that he had made political
contributions in order to gain access to the White House and
that one reason for seeking access was to promote his pipeline
project.90 As discussed below, Tamraz's efforts to
gain access to higher-level officials and promote his pipeline
by way of political contributions met with limited success.
The DNC's acceptance of Tamraz's contributions
According to Tamraz, sometime before July 1995, he received
a DNC solicitation letter incorrectly addressed to ``Robert
Tamraz.'' 91 In response, Tamraz stated that he
contacted the DNC to discuss contributions. Documents produced
to the Committee show that the DNC prepared a memorandum to
Chairman Fowler in anticipation of Fowler meeting with Tamraz
to discuss possible contributions.92 The memorandum,
dated July 12, 1995, was prepared by Alejandra Y. Castillo, a
DNC Finance Division employee. The memorandum explained that
Tamraz had indicated he would like to give $300,000, but warned
that accepting the contribution may ``generate considerable
problems for the DNC.'' 93 The memorandum set forth
in detail the controversies in Tamraz's past, including the
Lebanese embezzlement charges and the Commerce Department's
decision to bar Tamraz from participating in certain trade
activities. The memorandum even warned Fowler about Tamraz's
motivation, stating that ``Mr. Tamraz seeks political leverage
to secure his oil ventures in the Russian Republics (Caspian
Oil Project).'' 94
The memorandum, which concluded with ``Pay attention to
these warning signals!'', informed Fowler that the ``DNC
Finance Department is pending [sic] your guidance on whether to
continue our conversation with Mr. Tamraz and/or extend an
invitation to participate in DNC events.'' 95 Fowler
thereafter accepted contributions from Tamraz and supported his
attendance at a variety of DNC events. While these activities
were legal, Fowler's decision to support Tamraz's attendance at
DNC events was unwise given the warnings that Tamraz might
misuse his attendance at such events.
SEPTEMBER 1995: REQUEST FOR AN OFFICIAL MEETING WITH THE VICE PRESIDENT
In August 1995, Haroun Sassounian, a wealthy business
associate of Tamraz, requested that the Vice President have an
official meeting with him and Tamraz to discuss a Caspian Sea
pipeline venture.96 Tamraz testified that he never
requested this meeting and that Sassounian may have wanted to
push his pipeline proposal because it benefitted
Armenia.97 Nonetheless, the Vice President's staff
sought information in order to make a recommendation on whether
the Vice President should meet with Tamraz.
Heslin, who worked closely with the Vice President's
National Security staff on energy issues, was contacted by
Richard Grimes of the Vice President's National Security staff
about Sassounian's request.98 Heslin provided Grimes
with information about Tamraz and recommended against the
meeting.99 After Grimes consulted with Heslin and
other Vice Presidential staff members, Leon Fuerth, the Vice
President's national security advisor, sent a memorandum on
September 13, 1995 to the Vice President recommending that he
not meet with Tamraz.100 On October 2 and 3, the
Vice President's staff notified Sassounian and Tamraz that no
official meeting would be scheduled.101
Although Tamraz never had an official meeting with the Vice
President, he did attend several DNC-related events where the
President or Vice President were in attendance.
TAMRAZ'S ATTENDANCE AT DNC EVENTS
Summary of events
As discussed above, from 1994 to April 1996, a variety of
federal officials opposed Tamraz's efforts to have access to
high-level U.S. Government officials. In 1994 and 1995, the
Commerce Department twice decided not to support the business
ventures of Tamraz or his company. In June 1995, the Caspian
Sea pipeline interagency group decided that they would
recommend to their superiors that Tamraz not receive access to
higher-level federal officials. In September 1995, Fuerth
recommended against a Tamraz meeting with the Vice
President.102
In September and October 1995, Tamraz nonetheless attended
three DNC events. On September 11, he attended a Business
Council Reception at the White House where 320 people were in
attendance; on September 15, he attended a DNC Trustee Dinner
at the White House, where 80 people were in attendance; and on
October 2, he attended a fundraiser held at a private residence
and sat at the head table with Vice President
Gore.103
After the October fundraiser, the Vice President's staff
forwarded Fuerth's memo to the DNC, apparently in an attempt to
prevent future contact between Tamraz and the Vice
President.104 Thereafter, Tamraz was disinvited from
an October 5, 1995, DNC coffee at the White
House.105
As noted previously, on October 7, 1995, the Caspian Sea
pipeline contract was signed, and Tamraz was excluded from the
project. Thereafter, according to Heslin's testimony, she was
less concerned with Tamraz and his access to the federal
government because he was less able to misuse his access to
push for his Caspian pipeline deal.106
After Tamraz was excluded from the project, his
contributions to the Democratic Party dwindled. Perhaps in
hopes of encouraging more contributions, the DNC invited Tamraz
to a series of DNC events beginning on December 13, 1995. He
attended a 300-person holiday reception at the White House on
December 13, 1995; a 120-person DNC Trustee Dinner on March 27,
1996; a DNC coffee on April 1, 1996 where approximately 15
people were in attendance; and, finally, a showing of a movie
at the White House on June 22, 1996 organized by the DNC, where
approximately 50 people were in attendance.107
Tamraz testified that he did not have any substantive
conversations with the President or Vice President at these
events.108 Nonetheless, Tamraz's attendance at these
DNC events was contrary to the recommendations of federal
officials and was of concern to those involved in the Caspian
Sea pipeline project.
Fowler's role
In early October 1995, after Tamraz was notified that the
Vice President had declined to schedule a meeting with him and
after he had been disinvited from an October 5, 1995 DNC
coffee, Tamraz testified that he had a conversation with Fowler
and suggested that Fowler ``pick up'' information about him,
including information from the CIA, in order to clear his name
with the White House.109 Tamraz stated that he gave
to Fowler Bob of the CIA's name, most likely both his first and
last name, as well as his telephone number.110
Tamraz testified that he also spoke with Bob at this same time,
as he often did during his trips to Washington.111
In his deposition, Bob confirmed that he spoke to Tamraz in
October and testified that Tamraz informed him that Tamraz had
given his name and phone numbers to Fowler.112
On October 18, 1995, Bob of the CIA called Fowler and left
a message that he had called.113 On October 19,
1995, according to Bob of the CIA, Fowler returned his call and
the two discussed the issue of Tamraz meeting with the Vice
President.114 Bob testified that he told Fowler that
he could not assist with setting up any meetings, despite
evidence that Bob had already contacted the Vice President's
office on Tamraz's behalf.115
Two months later, on December 13, 1995, Fowler called Bob
again. According to Bob, Fowler repeated Tamraz's assertions
that the NSC was a captive of the oil companies and was
unfairly preventing Tamraz from attending DNC
events.116 Bob testified that he declined to provide
any information to Fowler.117 Bob also testified
that during this phone call, like his first phone conversation
with Fowler in October, he couldn't ``say for certain how
[Fowler] knew who he was talking to because CIA was never
mentioned.'' 118
According to documents presented to the Committee, Fowler
also telephoned Heslin in mid December 1995.119
Heslin testified that this was her first and only phone
conversation with Fowler.120 During that call,
Heslin testified that Fowler told her that she would be
receiving information about Tamraz from Bob of the
CIA.121 Heslin complained about the call to her
superior, Nancy Soderberg, Deputy Assistant to the President
for National Security Affairs.122 Soderberg told the
Committee during a staff interview that after talking to
Heslin, she spoke to Fowler and told him not to call NSC
staff.123
After talking to Fowler, Soderberg told the Committee that
she decided to check up on Tamraz herself. Soderberg and Heslin
stated that, as Heslin sat in Soderberg's office, Soderberg
called Randy Beers, senior director of intelligence at the NSC,
and asked him to find out about Tamraz and his relationship
with the CIA.124 Beers told the Committee that he
subsequently requested information from the CIA regarding
Tamraz.125 On December 29, 1995, the CIA faxed to
Beer's assistant a report containing information about
Tamraz.126
The December 1995 report was the third report that the CIA
had sent to the NSC regarding Tamraz. The first two reports
were sent to Heslin in May 1995 to prepare her for her June 2
meeting with Tamraz (one from the CIA's DI and the other from
the CIA's DO). The third report, although using the same format
as the reports in May, was faxed by the CIA directly to Beers's
office in late December 1995.
The Committee investigated whether it was Fowler who had
influenced the CIA's decision to send a third report to the NSC
and whether Fowler had any influence on the contents of that
report. These issues arose because Fowler had contacted Bob in
mid December before the report was sent, and because the report
contained only positive information about Tamraz. It does not
appear, however, that the CIA sent its third report in December
in response to Fowler's call to Bob. Because the report was
sent to Beers's office directly, following Beer's request to
the CIA for information on Tamraz, it is more likely that the
CIA sent the report in response to a request from Beers, not
Fowler. It also does not appear that Fowler had any influence
on the contents of the report. The third CIA report was drafted
by Bob of the CIA, who had already sent a report to Heslin in
May 1995 that, according to Heslin, had ``wholly positive''
information regarding Tamraz. Thus, it is no surprise, based on
Bob's first report, as well as on Bob's promotion of Tamraz
during calls to Heslin, that Bob's report in December contained
only positive information about Tamraz. The Committee was also
informed that the third report may have contained only positive
information due to appropriate internal legal restrictions
within the CIA itself. Fowler's contact with Bob was unwise
although he testified that he could not remember telephone
calls with anyone at the CIA.127
No effect on policy
Although Tamraz's political contributions to the Democratic
Party afforded him limited access to the President and Vice
President, U.S. policy toward the Caspian Sea pipeline project
was not affected by either Tamraz's contributions or his
access. Indeed, when Tamraz was asked whether he regretted
making his contributions to the Democratic Party, which
totalled less than $300,000, Tamraz responded that ``I think
next time, I'll give 600,000.'' 128
APRIL 1996: DEPARTMENT OF ENERGY OFFICIAL TALKS TO HESLIN
Tamraz's attendance at March 27 and April 1, 1996 DNC events
On March 27, 1996, Tamraz attended a DNC Trustee Dinner at
the White House along with 120 other guests.129
Tamraz testified that during a brief ``introduction to the
President,'' he mentioned his pipeline project, but according
to Tamraz, the President's reaction was to respond that he
would ``like to see jobs coming to America.'' 130
Tamraz also testified that he told the President that ``if
somebody wants to hear me out, I'm available.'' 131
At that same event, Tamraz testified that he also spoke to
Thomas F. McLarty, Counselor to the President and Special Envoy
for the Americas, in a reception line and, in very brief
exchange, the two discussed the oil industry in
general.132 According to McLarty, Tamraz talked
about his pipeline project and then the two discussed more
generally ``the importance of lessening the U.S. dependence on
the Middle East for energy supplies, something that [McLarty]
felt very strongly about for a number of years and conveyed on
a number of occasions to the President and others.''
133
During this dinner, Ann Stock, a social secretary at the
White House, made notes about some of the President's
conversations that evening. In a memorandum to the President
the next day, March 28, Stock mentioned the President's brief
conversation with Tamraz, writing that Tamraz ``wanted to
discuss the pipeline that will go from the Caspian Sea to
Turkey. You told him that someone would follow-up with him. He
will be at the 4/1 breakfast.'' 134 The President
wrote on the memo: ``Does Azer. Gov't want this'' and ``cc M
McLarty.'' 135 Based on the President's notations,
McLarty understood that he was being asked to obtain
information about the pipeline proposal.136
On April 1, McLarty and Tamraz attended a breakfast/coffee
at the White House, along with approximately 13 other
guests.137 Tamraz testified that he spoke to McLarty
``for about 30 seconds before we sat down'' 138 and
gave him a brochure from his company and business
card.139 Tamraz said he did not expect to hear back
from McLarty, but again told McLarty that ``[i]f anybody is
interested to talk to me about it, I'm available.''
140 McLarty testified that he recalled attending the
coffee and seeing Tamraz, but did not recall this brief
exchange.141
Follow-up on the pipeline project
Between March 27 and April 1, records indicated that
McLarty sent a fax to Kyle Simpson, a senior advisor at the
Energy Department.142 McLarty and Simpson both told
the Committee that McLarty often contacted Simpson when he
needed information about energy issues, and that the two had
frequent contact with each other.143 The Committee
does not have a copy of this fax, but McLarty testified that it
``probably was just a brief note [on the pipeline project]
asking for information or telling Kyle [Simpson] I would call
him.'' 144
Pursuant to Stock's March 28 memorandum, McLarty also sent
brief notes to both the President and Simpson on April 2, 1996.
To the President, he noted that he had seen Tamraz at the April
1 coffee and would follow up with him ``in a supportive but
prudent and appropriate way.'' 145 To Simpson, he
faxed Tamraz's brochure and business card and wrote ``Please
review and let's discuss the attached. (Relates to the fax I
sent you last week.)'' 146
Shortly thereafter, McLarty and Simpson talked on the
telephone. Both testified that McLarty requested information
about Tamraz's pipeline proposal. Specifically, McLarty
testified that he called Simpson ``to inquire about the
pipeline project. That was the assignment I had been given.''
147 Simpson also testified that McLarty wanted
information about the ``pipeline project.'' 148
Thus, after the President and McLarty had brief exchanges with
Tamraz at DNC events, McLarty was asked by the President to
find out whether there was any merit to the pipeline proposal
that Tamraz claimed would bring peace to the region and jobs to
Americans. Simpson explained generally that the U.S. Government
often seeks this type of information because the Government
sees value in U.S. companies building and owning projects
outside the U.S., although the Government is ``not terribly
particular'' about which U.S. company it is if more than one is
vying for a project.149
McLarty and Simpson both testified that when McLarty
requested information about the Caspian Sea pipeline proposal,
McLarty did not mention the issue of whether Tamraz should have
a meeting with the President.150 In fact, Simpson's
testimony reveals that he thought that Tamraz had already met
with the President. He stated in his deposition that McLarty
called and ``said the President had met with Mr. Tamraz and Mr.
Tamraz had talked about his pipeline proposal and he . . .
asked Mr. McLarty to find out'' if the pipeline was
important.151
It is also significant that the testimony establishes that
McLarty's conversation with Simpson did not involve a
discussion of political contributions. McLarty and Simpson
testified in their depositions that not only did they not
discuss political contributions, but that neither of them knew
anything about Tamraz's contributions at that
time.152 Tamraz himself testified that he never
discussed political contributions with McLarty or Simpson and,
in fact, noted that ``nobody at the White House has ever talked
to me about contributions, ever.'' 153
The request within the Department of Energy
Shortly after he received the call from McLarty, Simpson
was approached after an Energy Department staff meeting
sometime in early April 1996 by John ``Jack'' Carter, also a
senior policy advisor at the Energy Department.154
Carter had been a Department of Energy representative on the
interagency group chaired by Heslin and was one of the mid-
level officials who met with Tamraz in the spring of 1995.
Simpson testified that during this brief exchange, the issue of
Tamraz arose. Simpson testified that he explained to Carter
that he was seeking information on Tamraz's pipeline project
and asked Carter to tell him ``what's going on with this
pipeline.'' 155 He also testified that he most
likely conveyed to Carter that the request had come from
McLarty.156 Simpson testified that he did not
mention anything about political contributions,157
nor did he ask Carter to contact anyone in particular about
this request.158
This exchange between Simpson and Carter was, by both of
their accounts, brief and informal. In fact, Carter testified
that his only knowledge ``about Mr. McLarty's inquiry was from
[this] brief conversation with Kyle Simpson on April 3rd,
1996.'' 159 Based on this ``brief conversation,''
however, Carter testified that he thought that Simpson asked
about a Presidential meeting.160 Carter also said
that he ``thought'' that he saw ``handwritten notes'' with
numbers on them, stating that ``there was a pad with some notes
on it. . . . I can't remember distinctly. It might have had
some numbers on it. I am just not sure.'' 161
Finally, Carter testified that Simpson, ``either on the pad or
mentioned that the fellow had made a contribution, was going to
make more contributions apparently to somebody, political
contributions.'' 162 Simpson, however, testified
that he was not aware of Tamraz's political contributions and
did not mention anything about political contributions during
this conversation.163
Carter also testified, however, that although he thought
contributions were mentioned during this conversation, Simpson
did not suggest to him that anyone thought that Tamraz should
meet with the President because of Tamraz's political
contributions.164 In fact, Carter testified that,
during this brief exchange, he immediately told Simpson that he
was aware of Tamraz's efforts in the Caspian Sea region, and
that the President should have nothing to do with
him.165 However, Carter testified that he offered to
call Heslin and determine if there was an update regarding
Tamraz's pipeline proposal.166 Carter agreed that it
was his suggestion to call Heslin and that no one had suggested
that he do so.167
Based on this brief conversation, Carter called Heslin the
next day.168 Carter testified that his only purpose
in calling Heslin was to see whether the policy about the
Tamraz project had changed.169
Carter's call to Heslin
Heslin's testimony
Carter called Heslin on April 4, 1996. At that time,
according to Heslin, Carter was a colleague with whom she had
worked for a year and who she knew was looking for a job in the
White House.170 She also testified that by April of
1996, she was not actively working on the Caspian Sea pipeline
policy, but was instead ``simply monitoring and supporting the
technical implementation of the deal that had been agreed [to]
in October.'' 171
Heslin testified that Carter began the phone conversation
in early April by saying that he was calling ``at the behest of
Mack McLarty who had recently met with Roger Tamraz and really
liked his pipeline proposal.'' 172 Heslin then
stated that Carter asserted that McLarty wantedTamraz to have a
meeting with the President and that it ``would mean a lot of money for
the DNC.'' 173 According to Heslin, Carter also told her
that Tamraz had already given $200,000 and if he got a meeting with the
President, he would give another $400,000. Heslin stated that Carter
then asserted that both McLarty and the President wanted
this.174 Heslin testified that she doubted some of Carter's
statements, and told him ``this is just unbelievable. . . . I can't
believe that, Jack.'' 175 When Heslin resisted the idea of a
meeting, Heslin said that Carter ``was pretty aggressive'' and warned
her that she shouldn't be ``such a Girl Scout.'' Heslin also testified
that Carter warned her that McLarty might become Secretary of the
Energy Department, implying that if she resisted this request, her
long-term career in the energy field might suffer.176 Heslin
testified that the phone call lasted about 25 minutes.177
Carter's testimony
Carter's recollection of the phone call was different than
Heslin's. Carter testified that he called Heslin to see ``[i]f
there had been any change in our policy, or view towards
Tamraz, and whether there was any reason the President should
meet with Tamraz.'' 178 He said that he remembered
the call lasting only three to five minutes, and that during
that time, he did not state that the President or McLarty
wanted a meeting, nor that McLarty might become Secretary of
Energy.179 Carter also testified in his deposition
that he did not call Heslin a Girl Scout, although at the
public hearing, he testified that he may have.180
Although Carter remembered mentioning political contributions
to Heslin, he testified that he did not tie the contributions
to a meeting with the President.181 In sum, Carter
testified that ``I would not try to bring any pressure on
Sheila Heslin having to do with political matters. Moreover, I
wouldn't do it with something that I opposed, which was a
meeting with Tamraz and the President.'' 182
Carter recognized, however, based on Heslin's public
testimony the day before, that she had felt pressure during the
call. He stated that at the time of the call, it hadn't
``register[ed]'' with him that he was pressuring
her.183 Carter's explanation for their different
recollections was that Heslin ``read more into it certainly
than I ever intended because there was no intention of mine to
pressure her in any way.'' 184
Carter's testimony also reveals that he was in no position
to speak on behalf of McLarty, let alone the President. Carter
testified that he had never spoken to McLarty about this
particular request and, in fact, never worked closely with
McLarty on anything. For example, in his two years at the
Energy Department, Carter only talked to McLarty four or five
times on the telephone about energy issues and never met with
him in his office.185 Carter also testified that he
had a total of two personal conversations with McLarty, during
which he inquired about jobs at the White House, in an attempt
``to get a little more visibility in the administration.''
186 In early 1996, Carter testified that McLarty
informed him that he would not be hired.187
Carter was, however, familiar with Heslin and Tamraz. He
had been a member of the interagency group on Caspian Sea
policy and had traveled with Heslin and other officials to the
region in 1995. In May of that year, Carter was one of the mid-
level officials who met with Tamraz about his pipeline
proposal, and was opposed to it. However, unlike Heslin, Carter
thought that in the scheme of things, Tamraz ``was not an
important factor'' in the region.188 After October
1995, when the pipeline agreement was signed, Carter had little
contact with Heslin.
The Department of Energy responds to the request for information
After his call to Heslin, Carter testified that he reported
back to Simpson that the Tamraz's pipeline proposal did not
have merit and that the NSC had further information if McLarty
wanted to pursue the matter.189 Simpson testified
that he recalled conveying this information to McLarty, and an
April 8, 1996, telephone message from him to McLarty contains
the information.190 McLarty remembered Simpson
conveying that the pipeline proposal did not have ``any
uniqueness about it; there was nothing else that needed to be
done that was not already being done, and he did raise, as I
remember, . . . some caution flag about Mr. Tamraz.''
191 McLarty testified that, after receiving this
information from Simpson, he believes he orally conveyed it to
the President.192 The officials had no further
contact with Tamraz after April 1996.193
Conclusions
The evidence presented to the Committee establishes that in
late March 1996, Tamraz caught the President's ear at a DNC
function and told him that he was working on a supposedly
important peace pipeline proposal in the Caspian Sea region
that would bring jobs to Americans. The next day, the President
wrote ``cc'd McLarty'' and ``does the Azerb. Gov't want this''
on a memorandum from his social secretary. McLarty understood
this notation as a request to inquire about the merits of
Tamraz's pipeline proposal. On April 1, McLarty met Tamraz
briefly at a coffee, where he obtained Tamraz's business
brochure.
McLarty faxed the brochure to Simpson, his usual contact at
the Energy Department, and asked for information about Tamraz's
pipeline project. After an April 3 staff meeting within the
Energy Department, Carter and Simpson spoke briefly and the
issue of Tamraz and his pipeline arose. Simpson told Carter
during this exchange that McLarty had asked for information
about Tamraz's pipeline project. Carter offered to call Heslin
to respond to McLarty's request. The Minority believes,
however, that Carter did not accurately understand--or did not
accurately testify to--his brief exchange with Simpson.
Carter's testimony about the exchange, which he described as
Simpson posing a question whether Tamraz should meet with the
President, and some mention of political contributions, is full
of ``maybe's'' and ``I don't remember distinctly's'' and ``I
thought's.'' In contrast, Simpson and McLarty's testimony about
the request, which was for information about Tamraz's pipeline
proposal, is straightforward and follows logically from the
President's notation on the March 28 memorandum asking about
the pipeline. In his eagerness to respond to McLarty, Carter
likely assumed that the request was for a meeting between
Tamraz and the President, which would have been a logical
assumption based on Carter's experience with the interagency
group, where the subject of Tamraz and his attempts to meet
with government officials had often been discussed.
There is evidence that Carter also likely wanted to respond
to this request from McLarty in order to gain higher visibility
in the Administration, something he testified he was seeking at
that time. Additionally, Carter probably did not obtain the
contribution figures he conveyed to Heslin from Simpson. The
figure of $200,000 of past contributions by Tamraz was
generally correct, but had been reported in the energy
community and discussed in the interagency task force
meetings.194 In addition, press reports on Tamraz's
political contributions were found in files of both Department
of Energy and NSC officials, including Heslin. The second
figure Carter purportedly conveyed to Heslin was that Tamraz
was prepared to contribute an additional $400,000 to the DNC.
That figure is not correct, nor had Tamraz promised to
contribute more money at that time.195 Tamraz's last
substantial contribution had been many months before, in
October of 1995. Furthermore, Simpson and McLarty both
testified unequivocally that political contributions and a
potential meeting with the President were never discussed in
relation to their request for information about Tamraz's
pipeline proposal. In sum, Carter's testimony that Simpson
mentioned political contributions or a meeting with the
President is subject to question. Rather, it is likely that
Carter assumed that a meeting was requested and determined on
his own to aggressively respond to a request he had
misunderstood.196
Carter's testimony in that regard is also subject to
additional scrutiny because of contradictions between his
testimony and that of Heslin's regarding their phone
conversation. Carter stated that he called Heslin only to ask
her whether there had been a change in policy that would permit
a meeting between the President and Tamraz. Carter testified
that he never spoke to McLarty about the request, never
intended to pressure Heslin to agree to a meeting based on
political contributions, and never chastised her with names or
warnings about her future career in the energy field. Heslin,
however, testified that Carter invoked the names of McLarty and
the President, did pressure her based on political
contributions, and called her a Girl Scout and warned about
McLarty becoming Secretary of Energy.197
In the Minority's view, the evidence strongly supports a
conclusion that Carter acted on his own in making certain
statements to Heslin during their phone call, and that he did
so inappropriately. In fact, Heslin's supervisor Nancy
Soderberg came to this very conclusion when Heslin informed her
about the telephone call.198 Carter likely thought
he could win visibility in the Administration by putting some
pressure on a friend, and, when she resisted, he dropped the
matter. Heslin also probably reacted particularly strongly
because she had already been contacted about Tamraz by Bob of
the CIA several times, and Fowler once.
conclusion: access still for sale in 1997
In February 1997, Tamraz received letters from Republican
Senators Trent Lott and Mitch McConnell inviting him to become
a member of the Senatorial Inner Circle.199 Senator
Lott encouraged Tamraz to join the Inner Circle, stating, ``I
know you will enjoy meeting my Senate colleagues. . . . at the
meetings we have scheduled this year.'' Senator McConnell was
more specific. His letter stated that for a contribution to the
Republican Party, Tamraz could discuss high-level policy issues
at exclusive dinners with the Senate leadership.
Tamraz attempted to take up this offer of access, but his
contribution was returned. When asked why he had contributed
this time, Tamraz responded, ``you set the rules, and we are
following the rules. . . . [T]his is politics as usual. What is
new?'' 200 In reply, Senator Carl Levin summarized
the story of Tamraz:
I think that is exactly the point. . . . I just hope
our colleagues will closely follow these hearings,
enough so that we can vote to change politics as usual
because that is exactly what the problem is. It is
politics as usual.201
footnotes
\1\ Depositions were taken of Roger Tamaraz, John ``Jack'' Carter,
Kyle Simpson, Thomas McLarty, Donald Fowler, Bob of the CIA, and
several Department of Commerce officials. Interviews were conducted of
a variety of NSC employees, including Samuel ``Sandy'' Berger, Sheila
Heslin, Nancy Soderberg, Robert Suettinger, Randy Beers, Jamona
Broadway, and Melanie Darby. Documents were produced by Tamraz, the
Department of Commerce, the White House, the NSC, the CIA, the State
Department, and the DNC. Pub.ic testimony was taken of Heslin, Tamraz,
Carter and Simpson during Committee's hearings held on September 17 and
18, 1997.
\2\ Fortune magazine, 11/73.
\3\ Fortune magazine, 11/73.
\4\ See also Roger Tamraz deposition, 5/13/97, pp. 135-36
(discussion of Fortune magazine article and Tamraz's role in the 1973
pipeline deal).
\5\ Washington Post, 9/9/97.
\6\ New York Times, 5/4/78; Newsweek, 2/10/75.
\7\ Newsweek, 2/10/75.
\8\ Newsweek, 2/10/75.
\9\ Newsweek, 2/10/75.
\10\ Roger Tamraz deposition, 5/13/97, pp. 11-13; Washington Post,
9/9/97.
\11\ Washington Post, 9/9/97.
\12\ Roger Tamraz deposition, 5/13/97, pp. 11-14.
\13\ Roger Tamraz deposition, 5/13/97, pp. 3 & 12.
\14\ Roger Tamraz, 9/18/97 Hrg., p. 4; Roger Tamraz deposition, 5/
13/97, pp. 123-24 ; Washington Post, 9/9/97.
\15\ Roger Tamraz, 9/18/97 Hrg., pp. 3-4; Washington Post, 9/9/97.
According to Tamraz, the U.S. also asked him to arrange for the safe
passage into Lebanon of William Buckley, who was sent in to negotiate
the release of American hostages. Roger Tamraz, 9/18/97 Hrg., p. 4. For
additional information, see New York Times, 12/12/86, 12/11/86, 9/7/80;
Washington Post, 12/11/86; Los Angeles Times, 12/12/86; Chemical Week,
4/11/79.
\16\ Tamraz testified that he had a pattern of hiring former CIA
agents. Roger Tamraz, 9/18/97 Hrg., p. 42.
\17\ Roger Tamraz deposition, 5/13/97, p. 36. Tamraz asserts that
he was a permanent resident in the United States since 1967 and became
a U.S. citizen in 1989, Statement of Roger Tamraz, 5/13/97, thus making
him eligible to contribute to the RNC in 1985.
\18\ Congressional Quarterly, 8/20/97; see also public FEC records.
\19\ Congressional Quarterly, 8/20/97; Roger Tamraz, 9/18/97 Hrg.,
p. 65.
\20\ Staff Interview with Sheila Heslin, 5/28/97.
\21\ Exhibit 1064M: p. 1, Letter from Frank J. Fahrenkopf, Jr. to
Robert Tuttle, Special Assistant to the President for Presidential
Personnel, 6/25/85.
\22\ Exhibit 1064M: p. 1, Letter from Frank J. Fahrenkopf, Jr. to
Robert Tuttle, Special Assistant to the President for Presidential
Personnel, 6/25/85.
\23\ Exhibit 1064M: p. 2, Letter from Robert H. Tuttle, director of
presidential personnel to Frank J. Fahrenkopf, Jr., chairman of the
RNC, 7/10/85.
\24\ Senator Levin, 9/18/97, Hrg., pp. 64-66 (discussing Frank
Fahrenkopf's letter to the Committee regarding Roger Tamraz).
\25\ Roger Tamraz, 9/18/97 Hrg., pp. 4-6; Roger Tamraz deposition,
5/13/97, pp. 8-10; Washington Post, 9/19/97.
\26\ Roger Tamraz, 9/18/97 Hrg., pp. 4-6; Roger Tamraz deposition,
5/13/97, pp. 8-10; Washington Post, 9/19/97.
\27\ Roger Tamraz, 9/19/97 Hrg., pp. 4-6; DNC 3234854-58 (Three
articles describing the events found in DNC files: Financial Times, 9/
13/89; AP, 3/11/89; Reuters, 3/10/89).
\28\ Roger Tamraz, 9/19/97 Hrg., pp. 5-6. In 1989, Tamraz was
portrayed in the Lebanese media as an agent of Israel. Beirut
Newspaper, 1/1/89; Roger Tamraz, 9/19/97 Hrg., p. 5.
\29\ Roger Tamraz, 9/18/97 Hrg., p. 5.
\30\ Roger Tamraz, 9/18/97 Hrg., p. 5.
\31\ Department of Commerce Memorandum from Interpol, 4/11/97.
\32\ Application submitted to Melissa Moss, director of Office of
Business Liaison at Commerce, 3/1/94.
\33\ Melissa Moss deposition, 6/11/97, pp. 190-93.
\34\ Roger Tamraz deposition, 5/13/97, pp. 5-9. Tamraz admitted
that if ``anyone puts my name in Nexus-Lexus [sic], you get a lot of
horror stories. So I think it was justifiable, but they could have
given me a chance to explain the circumstances.'' Roger Tamraz
deposition, 5/13/97, p. 6.
\35\ A series of memoranda circulated between the Commerce
Department in Washington and the Commercial Service office in Hungary
reveal that in October 1995, Commerce had once again reviewed Tamraz's
questionable background and other issues concerning Oil Capital and
determined that the U.S. should not advocate on behalf of Oil Capital.
Memorandum from Jonathan Marks to Ann Ngo, 10/25/95; e-mail from Ira
Sockowitz to Jonathan Marks, 10/27/95; e-mail from Jonathan Marks to
Ira Sockowitz, 11/2/95.
\36\ Statement of Lanny J. Davis, 6/3/97; Federal Clearinghouse
(FDCH); FDCH Political Transcripts, 11/26/97.
\37\ On February 2, 1995, Platt's Oilgram quoted an administration
official as saying, ``we support multiple routes.'' On February 24,
1995, a senior State Department official said that ``in the short-run
there should be a variety of viable alternatives, and that in the
medium- to long-run the resource based in the region should support
pipelines.'' State Department press guidance on February 3, 1995 noted
that ``we expect eventual production in the Caspian region to require
multiple pipelines.'' A March 9, 1995 State Department message stated
that ``the USG still believes multiple routes are necessary and that
their development will provide additional security for oil companies as
they proceed. To this day, the U.S. has not taken a position on which
route the Baku-Ceyhan pipeline should take. The U.S. maintains that the
routes chosen is a decision for private companies and should be based
on commercial principle, non-discriminatory access, and market-based
tariffs. And in May 1995, President Clinton delivered a letter to
Azerbaijani President Heydar Aliyev. President Clinton wrote in the
letter that ``[t]he U.S. will work actively with Azerbaijan, other
governments in the region, the international financial institutions,
and private companies to support the development and export of the
Caspian Sea's vast energy reserves. Over the next several months, it
will be important to ensure that early oil can be exported reliably and
economically to the West.''
\38\ Sheila Heslin, 9/17/97 Hrg., pp. 4, 49-50.
\39\ Sheila Heslin, 9/17/97 Hrg., pp. 4; 50-51.
\40\ Sheila Heslin, 9/17/97 Hrg., p. 51; Staff interview with
Sheila Heslin, 5/28/97.
\41\ Sheila Heslin, 9/17/97 Hrg., p. 6.
\42\ Staff interview with Sheila Heslin, 5/28/97.
\43\ Sheila Heslin, 9/17/97 Hrg., p. 10.
\44\ Sheila Heslin, 9/17/97 Hrg., p. 8.
\45\ Sheila Heslin, 9/17/97 Hrg., p. 7.
\46\ Staff interview with Sheila Heslin, 5/28/97.
\47\ Sheila Heslin, 9/17/97 Hrg., p. 52; see also pp. 5-6, 19-20,
72.
\48\ Sheila Heslin, 9/17/97 Hrg., pp. 5-6, 19-20, 50-51, 72;
Senator Lieberman, 9/17/97 Hrg., p. 75.
\49\ Roger Tamraz deposition, 5/13/97, pp. 22-28.
\50\ Roger Tamraz, 9/18/97 Hrg., pp. 44-47. Tamraz first met with
the DNC to discuss donations in July of 1995. Roger Tamraz, 9/18/97
Hrg., p. 15. Tamraz began contributing to the Democratic Party on July
19, 1995. A DNC Memorandum to Tamraz from Richard Sullivan of the DNC,
dated March 28, 1996, states that Tamraz's contributions began on July
19, 1995 and ended on September 10, 1995. Exhibit 1168.
\51\ See Roger Tamraz deposition, 5/13/97, pp. 25-26; Roger Tamraz,
9/18/97 Hrg., pp. 45-48.
\52\ Sheila Heslin, 9/17/97 Hrg., pp. 7; 53.
\53\ Sheila Heslin, 9/17/97 Hrg., p. 8.
\54\ Sheila Heslin, 9/17/97 Hrg., p. 8, 33.
\55\ Sheila Heslin, 9/17/97 Hrg., pp. 9-10.
\56\ Sheila Heslin, 9/17/97 Hrg., pp. 10-11.
\57\ Roger Tamraz deposition, 5/13/97, pp. 26-28.
\58\ Roger Tamraz deposition, 5/13/97, p. 28.
\59\ Roger Tamraz deposition, 5/13/97, p. 28; Roger Tamraz, 9/18/98
Hrg., p. 47-48; John Carter, 9/18/97 Hrg., p. 155; Kyle Simpson, 9/18/
97 Hrg., pp. 53-54; Staff interview with Sheila Heslin, 5/28/97.
\60\ Sheila Heslin, 9/17/97 Hrg., p. 54.
\61\ Sheila Heslin, 9/17/97 Hrg., pp. 54; 56.
\62\ Sheila Heslin, 9/17/97 Hrg., p. 54
\63\ Sheila Heslin, 9/17/97 Hrg., pp. 54-55.
\64\ Sheila Heslin, 9/17/97 Hrg., pp. 54-55; Staff interview with
Sheila Heslin, 5/28/97.
\65\ Sheila Heslin, 9/17/97 Hrg., pp. 55-57; Staff interview with
Sheila Heslin, 5/28/97.
\66\ Sheila Heslin, 9/17/97 Hrg., p. 12.
\67\ Sheila Heslin, 9/17/97 Hrg., p. 12.
\68\ Sheila Heslin, 9/17/97 Hrg., p. 57.
\69\ Sheila Heslin, 9/17/97 Hrg., p. 12.
\70\ Sheila Heslin, 9/17/97 Hrg., pp. 57-58; Staff interview with
Sheila Heslin, 5/28/97.
\71\ Sheila Heslin, 9/17/97 Hrg., p. 20.
\72\ Sheila Heslin, 9/17/97 Hrg., pp. 58-59.
\73\ Sheila Heslin, 9/17/97 Hrg., p. 60.
\74\ Four pieces of evidence support this conclusion. In a
Committee interview, Heslin stated that it was her understanding that
Bob had also contacted someone in the Vice President's office to lobby
for Tamraz, and that she thought it might have been Dana Marshall.
Staff interview with Sheila Heslin, 5/28/97. Supporting Heslin's
statement are two e-mails produced to the Committee by the Vice
President's office. The first e-mail, dated September 6, 1995, was sent
by Richard Grimes of the Vice President's office to Leon Fuerth, the
Vice President's National Security Advisor. The e-mail discusses
Tamraz's request for a meeting and sets forth negative information
about Tamraz. Grimes had obtained this information about Tamraz from
Heslin. Dana Marshall was copied on the e-mail. Exhibit 1124, EOP
56535. The second e-mail is the one Marshall sent in response to
Grimes's e-mail about Tamraz. Marshall replied, ``Let's discuss this,
in light of my discussion with the individual I mentioned.'' 9/6/95 e-
mail from Richard Grimes to Leon Fuerth, EOP 56538. Marshall's response
e-mail concerning ``the individual'' he spoke to about Tamraz, worded
in such a secretive manner, suggests that Heslin was correct--Bob had
called Marshall of the Vice President's office to discuss Tamraz. The
fourth piece of information supporting this conclusion is a
declassified memorandum dated 10/20/95, written by Bob himself. Bob
stated that during a conversation with Donald Fowler, chairman of the
DNC, ``Fowler said he understood that I was in contact with the Vice
President's office concerning Tamraz.'' Memorandum for the Record,
written by Bob of the CIA, dated 10/20/95 and produced in declassified
form by the CIA. (The contacts between Bob and Fowler are reviewed more
fully below.)
Although the evidence does not definitely establish that Bob
lobbied the Vice President's office on behalf of Tamraz, largely
because the Committee never interviewed or deposed Grimes or Marshall,
it appears that Bob did in fact contact Vice President staff employee
Marshall in August or early September 1995 to discuss Tamraz's request
to meet with Vice President Gore.
\75\ Exhibit 1127: Memorandum to the Vice President from Leon
Fuerth, 9/13/95, EOP 45766-67.
\76\ Staff interview with Sheila Heslin, 5/28/97.
\77\ Memorandum for the Record, written by Bob of the CIA, produced
in declassfied form by the CIA, 10/20/95.
\78\ Bob of the CIA deposition, 7/11/97, p. 3.
\79\ Bob of the CIA deposition, 7/11/97, p. 3.
\80\ Bob of the CIA deposition, 7/11/97, pp. 4-5.
\81\ Memorandum for the Record, written by Bob of the CIA, produced
in declassified form by the CIA, 10/20/95.
\82\ Bob of the CIA deposition, 7/11/97, p. 7.
\83\ Bob of the CIA deposition, 7/11/97, p. 6.
\84\ Bob of the CIA deposition, 7/11/97, p. 6.
\85\ Staff interview with Sheila Heslin, 5/28/97.
\86\ Staff interview with Sheila Heslin, 5/28/97.
\87\ Roger Tamraz, 9/19/97 Hrg., p. 66.
\88\ Exhibit 1168; FEC records demonstrate that Tamraz's only other
contribution was $2,000 in September of 1996 for tickets to the DNC
Presidential Gala held at the Radio City Music Hall in New York City.
\89\ Roger Tamraz, 9/18/97 Hrg., p. 66.
\90\ Roger Tamraz, 9/18/97 Hrg., pp. 81-83.
\91\ Roger Tamraz deposition, 5/13/97, pp. 36-37.
\92\ Exhibit 1117: Memorandum to Fowler from Alejandra Y. Castillo,
7/12/95, DNC 3116351-53.
\93\ Exhibit 1117: Memorandum to Fowler from Alejandra Y. Castillo,
7/12/95, DNC 3116351-53.
\94\ Exhibit 1117: Memorandum to Fowler from Alejandra Y. Castillo,
7/12/95, DNC 3116351-53.
\95\ Exhibit 1117: Memorandum to Fowler from Alejandra Y. Castillo,
7/12/95, DNC 3116351-53.
\96\ EOP 5635, EOP 56539-40. Sassounian made this request at a DNC
breakfast on 8/8/97.
\97\ Roger Tamraz deposition, 5/13/97, pp. 53-54.
\98\ E-mail from Grimes to Heslin, 8/11/95, EOP 56532.
\99\ Staff interview with Sheila Heslin, 5/28/97; Exhibit 1200;
Heslin notes from conversations with Grimes, EOP 25068; Grimes e-mail
to Fuerth discussing information received from Heslin, 6/6/95, EOP
56535.
\100\ Exhibit 1127: Memorandum to the Vice President from Leon
Fuerth, 9/13/95, EOP 45766-67.
\101\ Handwritten notes from Scott Patrick to Jack Quinn regarding
Tamraz saying ``hasn't been regretted'' and ``NSA said no,'' 10/2/95,
EOP 25006-007; Notations on same page say ``10/2--left msg'' and ``10/
3--left msg.'', EOP 25004; Exhibit 1135: Memorandum to Jack Quinn and
Kim Tilley from Richard Grimes, 10/2/95, attaching copy of Fuerth's 9/
13/95 Memorandum to the Vice President.
\102\ Also in September 1995, Heslin checked the President's
schedule for that month and was informed that no meeting with Tamraz
was scheduled. Staff interview with Sheila Heslin, 5/28/97.
\103\ Exhibit 1136: Schedule for Vice President Al Gore, 10/2/95,
EOP 63857-68
\104\ Exhibit 1137; EOP 045764-67; Fax to Richard Sullivan of the
DNC from the Office of the Vice President dated 10/3/95.
\105\ Roger Tamraz deposition, 5/13/97, pp. 34-35.
\106\ Sheila Heslin, 9/17/97, Hrg., p. 20, 51-53.
\107\ Statement of Lanny J. Davis, 3/3/97; EOP 024911-14 (White
House WAVES records for Tamraz).
\108\ Roger Tamraz, 9/18/97 Hrg., pp. 22-24. Tamraz also told CBS's
Rita Braver that ``Maybe once, standing in line I said, ``I'm working
on a pipeline and that it's going to bring a half million jobs to
Americans'' and he said ``Good for you. Good luck,'' and that's about
it.'' CBS Television Broadcast, 3/17/97. Tamraz told NBC ``There was
never any one-on-one, it was with many other donors and you never had
more than 30 seconds with the President.'' NBC television broadcast 3/
17/97. Both interviews were reported in Hotline, 3/18/97.
\109\ Roger Tamraz, 9/18/97, Hrg., pp. 17-18.
\110\ Roger Tamraz, 9/18/97 Hrg., pp. 18, 22, 55. Fowler never told
Tamraz, however, that he had contacted Bob. Roger Tamraz, 9/18/97 Hrg.,
p. 21; Roger Tamraz deposition, 5/13/97, p. 65; Tamraz also doesn't
recall Bob telling him that Bob had ever spoken to Fowler. Roger Tamraz
deposition, 5/13/97, p. 65.
\111\ Roger Tamraz deposition, 5/13/97, pp. 59-60, 63-64.
\112\ Bob of the CIA deposition, 7/11/97, p. 2.
\113\ Bob of the CIA deposition, 7/11/97, pp. 3--4, 16-17.
\114\ Bob of the CIA deposition, 7/11/97, pp. 7, 17-19.
\115\ See endnote 74
\116\ Bob of the CIA deposition, 7/11/97, p. 11.
\117\ Bob of the CIA deposition, 7/11/97, p. 10-11.
\118\ Bob of the CIA deposition, 7/11/97, p. 11.
\119\ Sheila Heslin, 9/17/97 Hrg., p. 23.
\120\ Sheila Heslin, 9/17/97 Hrg., pp. 23, 60.
\121\ Sheila Heslin, 9/17/97 Hrg., p. 23.
\122\ Sheila Heslin, 9/17/97 Hrg., p. 24.
\123\ Sheila Heslin, 9/17/97 Hrg., pp. 26-27; Staff interview with
Nancy Soderberg, 5/30/97; Donald Fowler deposition, 5/21/97, p. 230.
\124\ Sheila Heslin, 9/17/97 Hrg., pp. 63-64; Exhibit 1159; E-mail
from Soderberg's assistant, Kenneth Baldwin, to Beers, 12/21/97, EOP
056543; Staff interview with Nancy Soderberg, 5/30/97; Staff interview
with Sheila Heslin, 5/28/97; Staff interview with Randy Beers, 5/23/97
and 6/13/97.
\125\ Staff interview with Randy Beers, Senior Director for
Intelligence, NSC, 5/23/97 and 6/13/97.
\126\ The CIA report faxed to Randy Beers, NSC's Senior Director of
Intelligence, on December 29, 1995 is lodged in the Office of Senate
Security.
\127\ Don Fowler deposition, 5/21/87, p. 229.
\128\ Roger Tamraz, 9/18/97, Hrg. p. 86. Senator Lieberman asked
Tamraz whether he felt ``badly about having given the 300,000.'' FEC
records indicate that Tamraz gave $220,000 to the Democratic Party from
July to October, 1995.
\129\ Exhibit 1164: 3/27/96 DNC Trustee Dinner invitation
acceptance report, 10/20/96, EOP 031249-54.
\130\ Roger Tamraz, 9/18/97 Hrg., pp. 22-23.
\131\ Roger Tamraz, 9/18/97 Hrg., p. 24.
\132\ Roger Tamraz, 9/18/97 Hrg., pp. 24, 28.
\133\ Thomas McLarty deposition, 6/30/97, pp. 28-29.
\134\ Exhibit 1165: Memorandum from Ann Stock to the President, 3/
28/96, EOP 046305.
\135\ Exhibit 1166: Memorandum from Ann Stock to the President, 3/
28/96, with notations, EOP 046305.
\136\ Thomas McLarty deposition, 6/30/97, p. 56.
\137\ Exhibit 1170: DNC Memorandum re 4/1/96 coffee, 3/29/96;
Exhibit 1171: List of 4/1/96 coffee attendees.
\138\ Roger Tamraz, 9/18/97 Hrg., p. 25.
\139\ Roger Tamraz, 9/18/97 Hrg., p. 27.
\140\ Roger Tamraz, 9/18/97 Hrg., p. 27.
\141\ Thomas F. McLarty deposition, 6/30/97, p. 44.
\142\ Exhibit 1174: Memorandum from Mack McLarty to Kyle Simpson
stating, ``Relates to the fax I sent you last week,'' 4/2/96, EOP
024980-81.
\143\ Thomas McLarty deposition, 6/30/97, pp. 42-43; Kyle Simpson
deposition, 6/25/97, p. 26.
\144\ Thomas McLarty deposition, 6/30/97, p. 39.
\145\ Exhibit 1173: Memorandum from Mack McLarty to the President,
4/2/96, EOP 041537; Thomas McLarty deposition, 6/30/97, pp. 50-51.
\146\ Exhibit 1174: Memorandum from Mack McLarty to Kyle Simpson,
4/2/96, EOP 024980-81.
\147\ Thomas McLarty deposition, 6/30/97, p. 56.
\148\ Kyle Simpson deposition, 6/25/97, pp. 43-48; Kyle Simpson, 9/
18/97 Hrg., pp. 49-51.
\149\ Kyle Simpson deposition, 6/25/97, p. 54.
\150\ Kyle Simpson deposition, 6/25/97, pp. 43, 46-48; Kyle
Simpson, 9/18/97 Hrg., p. 50; Thomas McLarty deposition, 6/30/97, p.
60.
\151\ Kyle Simpson deposition, 6/25/97, p. 43.
\152\ Thomas McLarty deposition, 6/30/97, pp. 30, 56-57; Kyle
Simpson, 9/18/97 Hrg., pp. 50-51; Kyle Simpson deposition, 6/25/97, pp.
43, 46-48.
153 Roger Tamraz, 9/18/97 Hrg., p. 73. On March 28,
Tamraz received two memoranda from the DNC which he had been requesting
for months. Exhibit 1167: Memorandum from Richard Sullivan and Ari
Swiller to Roger Tamraz, 3/28/96, DNC 3116355; Exhibit 1168: Memorandum
from Richard Sullivan and Ari Swiller to Roger Tamraz, 3/28/96, DNC
3116354. The memoranda list Tamraz's political contributions to date,
one adding up to $300,000, the other adding up to $205,000. Tamraz
testified that he had requested these memoranda for his records and
never showed them to anyone. Roger Tamraz, 9/18/97 Hrg., p. 73. Simpson
and another Energy Department official, John Carter, all testified that
they had not seen the document until preparing for depositions in 1997.
Kyle Simpson, 9/18/97, Hrg., p. 50; John Carter, 9/18/97, Hrg., p. 32.
McLarty testified that he had no knowledge of Tamraz's political
contributions at the time. Thomas McLarty deposition, 6/30/97, p. 30.
154 Jack Carter, 9/18/97 Hrg., pp. 29-30; Jack Carter
deposition, 6/23/97, p. 44.
155 Kyle Simpson deposition, 6/25/97, p. 57.
156 Kyle Simpson deposition, 6/25/97, p. 55; Kyle
Simpson, 9/18/97, Hrg., p. 52.
157 Kyle Simpson, Hrg., pp. 74-75, 91; Kyle Simpson
deposition, 6/25/97, pp. 55-57; See also endnote 149.
158 Kyle Simpson deposition, 6/25/97, p. 55-57.
159 Jack Carter, 9/18/97 Hrg., pp. 60, 48.
160 Jack Carter, 9/18/97 Hrg., pp. 30; 35; Jack Carter
deposition, 6/23/97, pp. 44-45.
161 Jack Carter deposition, 6/23/97, pp. 44-45.
162 Jack Carter deposition, 6/23/97, p. 45.
163 Kyle Simpson, Hrg., pp. 74-75, 91; Kyle Simpson
deposition, 6/25/97, pp. 55-57.
164 Jack Carter, 9/18/97 Hrg., pp. 31-32, 36-37; John
Carter deposition, 6/23/97, p. 79.
165 Jack Carter, 9/18/97 Hrg., p. 30.
166 Jack Carter, 9/18/97 Hrg., p. 30.
167 Jack Carter, 9/18/97 Hrg., pp. 130-31.
168 Jack Carter, 9/18/97 Hrg., pp. 28-29.
169 Jack Carter, 9/18/97 Hrg., pp. 30, 33, 37.
170 Sheila Heslin, 9/18/97 Hrg., pp. 28, 44.
171 Sheila Heslin, 9/17/97 Hrg., p. 28.
172 Sheila Heslin, 9/17/97 Hrg., p. 29.
173 Sheila Heslin, 9/17/97 Hrg., p. 29.
174 Sheila Heslin, 9/17/97 Hrg., pp. 29-30.
175 Sheila Heslin, 9/17/97 Hrg., p. 46.
176 Sheila Heslin, 9/17/97 Hrg., pp. 30, 47; Staff
interview with Sheila Heslin, 5/28/97.
177 Sheila Heslin, 9/17/97 Hrg., pp. 31, 42.
178 Jack Carter deposition, 6/23/97, p. 45.
179 Jack Carter deposition, 6/23/97, p. 60-63; Jack
Carter, 9/18/97 Hrg., pp. 126-27.
180 Jack Carter deposition, 6/23/97, p. 64; Jack Carter,
9/18/97 Hrg., pp. 125-26.
181 Jack Carter deposition, 6/23/97, p. 79.
182 Jack Carter, 9/18/97 Hrg., p. 92.
183 Jack Carter, 9/18/97 Hrg., p. 37.
184 Jack Carter, 9/18/97 Hrg., p. 93.
185 Jack Carter deposition, 6/23/97, pp. 19-20.
186 Jack Carter deposition, 6/23/97, pp. 20-21.
187 Jack Carter deposition, 6/23/97, p. 21.
188 Jack Carter deposition, 6/23/97, p. 42.
189 Kyle Simpson deposition, 6/25/97, pp. 59-60.
190 Kyle Simpson deposition, 6/25/97, pp. 62-63; Exhibit
1182: Phone message slip, EOP 024962.
191 Thomas McLarty deposition, 6/30/97, pp. 62-63.
192 Thomas McLarty deposition, 6/30/97, pp. 67-69.
193 Roger Tamraz deposition, 5/13/97, p. 28; Roger
Tamraz, 9/18/97 Hrg., pp. 47-48; John Carter, 9/18/97 Hrg., p. 155;
Kyle Simpson, 9/18/97 Hrg., pp. 53-54; Staff interview with Sheila
Heslin, 5/28/97; Thomas McLarty deposition 6/30/97, p. 72.
194 Jack Carter, 9/18/97 Hrg., p. 33.
195 Hearing Exhibit 1158; Roger Tamraz, 9/18/97, Hrg.,
p. 51.
196 Senator Domenici concluded after a morning of
testimony that he believed that Carter was telling the truth about this
exchange with Simpson, and that Simpson was not being truthful. Senator
Domenici, 9/18/97 Hrg., pp. 101-02. This conclusion, however, is not
supported by the record. It is quite clear that Carter's testimony was
faulty on every count--it contradicts the sworn testimony of not only
Simpson and McLarty, but also of Heslin. Considering that Heslin
apparently was found by the Majority and Minority to be a highly
credible witness, it is relevant that it is Carter's testimony that
directly and specifically contradicts Heslin's.
If Heslin's testimony was accurate regarding her telephone call
with Carter, then it is necessary to conclude that Carter's testimony
was not accurate. Thus, if Carter's testimony about his phone call with
Heslin is not accurate, it is difficult to argue that Carter's version
of his brief conversation with Simpson is accurate, particularly when
it is also contradicted by two individuals.
197 During her public testimony, Heslin speculated that
Carter acted in the manner because he was acting on the behalf of
someone else. However, this speculation is contradicted by the evidence
before the Committee. For example, Carter himself testified that he was
not trying to pressure Heslin based on political contributions and that
one had even suggested that he do so. In addition, although Heslin
thoughts that Carter was close to McLarty, and therefore might do
something on his behalf, this was not the fact. In his two years at the
Energy Department, Carter had spoken to McLarty on the phone a few
times, but had never met with him personally. Furthermore, no one but
Carter contacted Heslin in the spring of 1996 with any type of request
that Tamraz have a meeting with the President. Finally, Heslin's
speculaiton is contradicted by testimony establishing that Tamraz had
not in fact requested a meeting with the President and that no one in
the While House even contacted Tamraz after April of 1996. See full
text of chapter for a full discussion of these issues as well as
supporting citations.
198 Staff interview with Nancy Soderberg, 5/30/97;
Minority counsel, 9/17/97 Hrg., pp. 40-41.
199 Roger Tamraz, 9/18/97 Hrg., pp. 67, 169; Exhibits
1065 & 1066.
200 Roger Tamraz, 9/18/97 Hrg., p. 170;
201 Senator Levin, 9/18/97 Hrg., p. 170.
PART 5 FUNDRAISING AND POLITICAL ACTIVITIES OF THE NATIONAL PARTIES
AND ADMINISTRATIONS
Chapter 31: Other Contributor Access Issues
Johnny Chung, a Taiwan-born American businessman, was a
large contributor to the Democratic National Committee
(``DNC'') during the 1996 election cycle and a frequent visitor
to the White House. During some of these visits, he was
accompanied by Asian business associates, for whom he arranged
``photo opportunities.'' Many of his visits were to the office
of Margaret Williams, then Chief of Staff for First Lady
Hillary Clinton. During a March 1995 visit to Williams's
office, Chung gave her a $50,000 check payable to the DNC,
which she immediately forwarded to the DNC. The Committee
investigated whether Chung's access to the White House was
inappropriate and whether Williams acted appropriately in
connection with a $50,000 donation by Chung.
Chung did not cooperate with the Committee's investigation,
citing his Fifth Amendment protection against self-
incrimination. Although he offered to testify in exchange for
immunity, this offer was not accepted by the Committee. The
Committee did not hold hearings on Chung, but it did take
deposition testimony from Margaret Williams and her assistant
Evan Ryan.
This chapter of the Report also discusses other
controversial individuals who were provided access to President
Clinton and to former President Bush.
(1) The evidence before the Committee shows that even
though Chief of Staff to the First Lady, Margaret Williams,
immediately placed the contribution from Johnny Chung to the
DNC in the mailbox, it would have been more prudent for her to
have refused to accept the check from Chung and told him to
give it directly to the DNC.
(2) Chung's access to the White House, which was based in
part on his contributions to the Democratic Party, was
excessive and inappropriate. On one occasion Chung was
permitted to bring foreign business associates to view the
President's delivery of a radio address without appropriate
vetting by the DNC or the White House.
JOHNNY CHUNG
Chien Chuen (``Johnny'') Chung1 is a California
businessman who emigrated from Taiwan 2 and became a
United States citizen. Chung, who is an engineer, established
Automated Intelligent Systems Inc.3 (``AISI''), a
company in the Los Angeles area. AISI sells a computer system
that enables customers to broadcast thousands of copies of a
fax simultaneously.4 In the mid-1990s, Chung became
active internationally, doing business in China and other parts
of Asia. For example, he sold part of his fax business to Asian
investors and acted as a consultant to Asian businessmen.
---------------------------------------------------------------------------
Footnotes at end of chapter 31.
---------------------------------------------------------------------------
Political contributions
Chung has told reporters that he began courting politicians
because he felt this would help him market AISI's fax service
to government offices.5 He began making political
contributions in August 1994.6 During the 1994 and
1996 election cycles, according to Federal Election Commission
records, Chung or his fax business contributed more than
$360,000 to the DNC and to congressional campaigns.7
Chung also raised money for the Democrats.
Access to administration officials
From 1994 to 1996, Chung attended several fundraising and
other events also attended by top U.S. officials. For example,
the August 1994 contribution was connected with a birthday
party for the President.8 In December of that year,
Chung donated $40,000 in order to attend, with several guests,
a fundraising luncheon attended by the First Lady.9
During the 1996 cycle, according to a press report, Chung
purchased several tickets to a ``$25,000-a-plate dinner at the
California home of the film maker Steven Spielberg and a
birthday bash for Mr. Clinton at Radio City Music Hall and
brought several guests.''10 During the same period
that Chung emerged as an important Democratic donor, he became
a frequent visitor to the White House Complex, a term that
refers to the White House itself and to a few nearby buildings,
including the Old Executive Office Building (``OEOB'').
Contrary to several press reports, most of these visits were
not to the White House itself, but to the OEOB, where he
visited the offices of Margaret Williams, then Chief of Staff
to the First Lady.11 The First Lady does not
maintain an office in the suite where these offices are
located.12
Some of Chung's White House visits were apparently aimed at
impressing Asian business associates,13 who
sometimes accompanied him. In December 1994, for example, Chung
brought a group of mainland Chinese executives to the White
House, including Chen Shizeng, chairman of Haomen, a beer and
soft drink company.14 Chung and his guests posed for
pictures with President and Mrs. Clinton.15 Without
the White House's knowledge, and apparently without consulting
Chung, the Haomen company later used the photos in China to
promote its beer.16
On March 11, 1995, Chung and five businessmen from China
watched President Clinton deliver his weekly radio address in
the Oval Office.17 Chung had arranged the visit with
assistance from the DNC.18
At these visits, Chung did not meet privately with the
President or have an opportunity to engage in any lengthy
conversations with him.
National Security Council staff members were wary of
Chung. On April 7, 1995, NSC staff member Melanie Darby sent an
e-mail message to colleagues regarding the March 11
presidential radio address. She asked whether they felt the
visitors should be given copies of the photographs taken that
day. She wrote that President Clinton ``wasn't sure we'd want
photos of him with these people circulating around'' and that
the DNC had arranged for the six businessmen to visit without
``knowing anything about them except that they were D.N.C.
contributors.'' But she added that ``these people are major
D.N.C. contributors and if we can give them the photos, the
President's office would like to do so.'' 19
(Contrary to that statement, no evidence has emerged that
Chung's guests donated to the DNC.)
Later that day, Robert L. Suettinger, Director of Asian
Affairs in the NSC, replied with a e-mail in which he advised
``caution'' concerning Chung.
My impression is that he's a hustler, and appears to
be involved in setting up some kind of consulting
operation that will thrive by bringing Chinese
entrepreneurs into town for exposure to high-level US
officials. My concern is that he will continue to make
efforts to bring his ``friends'' into contact with the
POTUS [the President] and FLOTUS [the First Lady]--to
show one and all he is a big shot, thereby enhancing
his business. I'd venture a guess that not all his
business ventures--or those of his clients--would be
ones the President would support. I also predict that
he will become a royal pain, because he will expect to
get similar treatment for future visits. He will be
persistent.20
In the summer of 1995, Chung attempted to involve himself
in assisting Harry Wu, an American labor activist who had been
jailed in China.21 Chung sought a letter from
President Clinton supporting his efforts to help release Wu but
was rebuffed.22 DNC Chairman Donald Fowler did,
however, sign a letter describing Chung as ``a friend and a
great supporter of the DNC.'' 23 Chung's efforts to
involve himself in this delicate matter provoked concern on the
part of the NSC's Suettinger. In a note to then-National
Security Adviser Anthony Lake, he described Chung's mission as
``very troubling'' and said he feared that Chung could do
``damage.'' He advised that ``we be very careful about the
kinds of favors he is granted.'' 24 Ultimately,
Chung's attempt to involve himself in this issue had no effect
on the administration's handling of the Wu case. (Wu was later
released.)
Despite concerns about Chung, he was allowed to continue
visiting the White House Complex. For example, Secret Service
records show that he made 30 visits to the White House Complex
in 1995, most of them to Margaret Williams's office in the Old
Executive Office Building.
Link between contributions and visits
Although Chung did not provide evidence to the Committee,
he has told journalists (in unsworn statements) that his White
House access was a direct quid pro quo for political
contributions. ``I see the White House is like a subway,'' he
said. ``You have to put in coins to open the gates.''
25 Chung has also stated that he and his associates
attended the March 11, 1995, presidential radio address as a
quid pro quo for a $50,000 donation he made to the DNC around
that time--in the form of a check he handed to Margaret
Williams.26
The Committee found no evidence that access to the White
House was sold in the crude manner described by Chung.
Regarding the $50,000 contribution, the DNC's Fowler denied
under oath that the invitation was provided in exchange for a
specific donation.27 He also testified that he was
not involved in getting Chung an invitation to the radio
address,28 and that he was unaware that Chung had
given a check to Williams for the DNC until the incident was
reported in the media.29 Williams testified that she
played no role in arranging the invitation to the radio
address.30 She also testified that such invitations
are not difficult to obtain.31
Although Chung's ``subway'' analogy appears to be an
exaggeration, his status as a contributor was probably the main
reason he was allowed to visit so frequently. Testimony
established that White House officials viewed Chung's visits as
``irritating,'' but Williams permitted him to visit in her
outer office, despite the fact that he had no obvious reason to
be there.32 Williams stated that she expected every
visitor, including Chung, to be welcomed by the staff. She
tolerated him because she believed that he had been mistreated
and ridiculed.33 She also stated, ``[T]here were
many difficult days for Mrs. Clinton over this time period, and
the idea that somebody adored her and wanted to be there was
fine.'' 34 But Williams also acknowledged that she
knew Chung was a large donor to the DNC,35 and that
this was a factor in her decision to let him spend time in her
office.36
Williams's handling of Chung's $50,000 DNC donation
Chung's most controversial donation was a check for $50,000
to the DNC, which he gave to Margaret Williams in March 1995.
As noted above, Chung claimed that Williams solicited this
check as as quid pro quo for attendance at a presidential radio
broadcast.
On March 8, Chung arrived at Williams's office at the OEOB
without an appointment and spoke to Evan Ryan, Williams's
assistant.37 Chung's lawyer has told Time magazine
that Chung wanted to arrange lunch in the White House mess and
a meeting with the First Lady for the five visiting Chinese
executives. According to Time, ``[T]he subject turned to
Democratic Party needs. Ryan remarked that the President's
party had to cover the costs of political events held by the
First Lady at the White House.'' 38 In interviews
with the press, Chung has alleged that he wanted to ``help the
First Lady'' defray some of the costs associated with Christmas
parties the DNC held at the White House, and this was why he
later made a $50,000 contribution.39
The sworn testimony of both Ryan and Williams contradicts
Chung's unsworn assertions to journalists. During the March 8
conversation, according to Ryan, Chung mentioned a contribution
he was planning to make.40 According to Ryan, Chung
frequentlytalked about his contributions, and in this case she
thought that he was boasting as he often did.41 Ryan
testified that Chung also mentioned that he wanted to bring some
visitors to the White House, and Ryan asked Williams what to do about
the requests.42 Williams suggested that Ryan make some calls
about setting up a White House tour and lunch in the White House
mess.43 This was the extent of Williams's instructions to
Ryan regarding Chung's requests, according to Ryan.44
Ryan testified that she knows of no solicitation of money
that ever occurred in the White House.45 Regarding
the specific allegation that either she or Williams solicited
the $50,000 contribution from Chung to help pay off debts, Ryan
testified that she never had any discussion with Chung during
which she suggested that he could help defray costs of events
at the White House.46
During testimony before the House Committee on Government
Reform and Oversight, Williams confirmed Ryan's version,
testifying that she had no knowledge of Ryan ever mentioning to
Chung that he could make a $50,000 contribution to cover some
of the DNC debt. She also testifed that she had never solicited
$50,000 from Chung to help pay some of the money the DNC owed
the White House to cover the costs of holiday parties the DNC
threw at the White House.47 Williams also testified
to the House Committee that she never told Ryan that if Chung
were to ask how he could help the First Lady, Ryan should
suggest to him that he help pay off the DNC's debt to the White
House.48 Williams has stated, however, that Chung
had asked in the past if he could give something to help Mrs.
Clinton.49 On those occasions, Williams had
suggested that he make a contribution to the DNC, or the
Presidential Legal Expense Trust, but told him that he could
not give money to Mrs. Clinton.50
According to Ryan's testimony, there were no discussions
between Ryan and Williams regarding Chung's contributions or
regarding any connection between his contributions and actually
fulfilling his requests for a lunch in the White House mess and
a White House tour.51 Neither Williams nor Ryan
suggested to Chung that his requests would be expedited if he
contributed to the DNC.
On March 9, according to several press reports, Chung
visited the DNC to ask if he could bring a delegation of five
executives from China to the White House to have a photo taken
with the President. Although, as noted above, he has claimed
that he offered to make a $50,000 contribution in exchange for
such a visit, the Committee found no evidence to support this
allegation.
That same day, Chung appeared at the Old Executive Office
Building, and Ryan gave permission for him to enter
52 and visit Williams's office. Williams had not
known that Chung was coming to her office that
day.53 Ryan testified that Williams seemed
perplexed, but dismissed this as ``well, whatever, . . . that's
Johnny.'' 54
Chung handed Williams a check, despite her
protestations.55 Williams testified that she
initially rejected the check, thinking that it was made out to
Mrs. Clinton.56 When Chung stated that it was for
the DNC, she decided that she ``just wanted to get out of
[there]'' so she agreed to forward the check to the
DNC.57 She then dropped the check into her outbox
with no note to the DNC, and without telling anyone at the DNC
that they should be expecting it.58 She estimated
that the entire encounter lasted perhaps 60 to 90
seconds.59 She said she did not even know the amount
of the check.60
Williams had never been handed a political contribution in
the White House before,61 and there were no standard
procedures about what to do in such a case.62 On
several occasions, checks intended for the DNC had been mailed
by mistake to the First Lady's office, and Williams simply
forwarded them to the DNC.63 She decided to handle
Chung's check in the same manner. She put it in her out box,
64 did not tell anyone she had received it, and did
not record her receipt of it anywhere.65 She
testified:
A: Just like any other check I might get, I'd put it
in the mail box, in my out box, and when the rest of
the things from my out box were collected or, you know,
whatever volunteer, would sort through it and send the
check where it needed to go.
Q: Did you put a note on it, sent to DNC?
A: No. I--I mean, I figure what I had always done is
just put the check in. I never take the time to write a
note.66
Chung, in an unsworn statement to the Los Angeles Times,
said that Ryan told him that Mrs. Clinton was aware of his
contribution.67 This statement is directly
contradicted by the sworn testimony of both Ryan and Williams.
Ryan testified that she had no knowledge of whether the First
Lady was aware of the contribution.68 She also
testified that Chung never asked her if the First Lady knew
that he had made a contribution to the DNC.69
Williams also testified that she never told anyone about the
contribution.70
The Pendleton Act
Under the Pendleton Act, 18 U.S.C. Sec. 607, it is unlawful
``for any person to solicit or receive any contribution'' on
federal property. Although Chung, as discussed above, asserted
to reporters that the check was solicited, the Committee found
no evidence to corroborate that assertion. Morever, Williams
and Ryan both testified that they did not solicit the
contribution.
Williams also does not appear to have violated Sec. 607 by
``receiving'' Chung's contribution in her office at the OEOB.
Under federal regulations, in order to violate Sec. 607 by
``receiving'' a contribution, one must ``come into possession
of something from a person officially on behalf of a candidate,
a campaign, a political party, or a partisan political group''
[emphasis added].71 Regulations also provide that
``ministerial acts'' are not covered by the
statute.72 A 1995 Justice Department opinion
concluded that the mere taking of custody of acontribution by
someone who has no ``right of disposal'' cannot be considered
``receipt'' of the contribution and is, therefore, not governed by the
statute.73
Under these circumstances, Williams was a mere custodian of
the check Chung gave her. She handled the check for mere
seconds, accepting it from him and then immediately putting it
in her outbox. She did not even notice how much it was made out
for. Williams never had the ``right of disposal'' discussed in
the Justice Department opinion. Instead (using the language of
the Justice Department opinion), she ``had no more to do with
the transaction than a mere messenger would have had to whom
the owner had handed it for delivery.'' 74 Thus, it
appears that Williams never actually received the money within
the meaning of 18 U.S.C. Sec. 607.
Moreover, Williams's role as chief of staff to the First
Lady gave her no authority to act officially on behalf of the
DNC. She had only sporadic contact with the DNC.75
Aside from scheduling the First Lady at events which were
fundraisers, or had fundraising components, Williams was not
involved with DNC fundraising.76 The only time she
would intervene on behalf of a donor would be to pass his or
her name along to the Office of the Social Secretary for
possible inclusion in a White House event.77 By
physically taking a check from Chung she was not then actually
receiving it on behalf of the DNC, because she was not an agent
of the DNC. She was merely performing a ministerial act.
Finally, Sec. 607 does not apply to soft money
contributions.78 According to Federal Election
Commission records, the contribution Chung made went into the
DNC's non-federal or ``soft'' money account.79
Because it was soft money, soliciting or receiving the
contribution even if it had occurred would not have violated
Sec. 607.80
The Hatch Act
Under the Hatch Act, 5 U.S.C. Sec. 7323, a federal employee
may not ``knowingly solicit, accept, or receive a political
contribution.'' Unlike the Pendleton Act, which does not apply
to contributions not covered by the Federal Election Campaign
Act, the Hatch Act does apply to soft money.
As discussed above, however, the Committee received no
evidence that Williams solicited the contribution. Moreover,
the analysis of whether a contribution has been received or
accepted is the same under the Hatch Act as the analysis for
whether a contribution has been received under the Pendleton
Act: The mere unofficial taking of custody is not covered by
the act.81 As discussed above, Williams did not take
the check from Chung on behalf of anyone else, nor did she have
the authority to accept checks on behalf of the DNC. She simply
performed a ministerial act by putting the check Chung gave her
directly into her outbox to be sent to the DNC. Williams
therefore did not receive or accept a contribution as defined
by the Hatch Act.
OTHER INDIVIDUALS
Jorge Cabrera
Jorge Cabrera, a Florida businessman, contributed $20,000
to the DNC in order to attend a fundraising event in Miami in
December 1995, where he met Vice President Gore and the First
Lady.82 A few days later, Cabrera attended a White
House Christmas party at which the First Lady was
present.83
In early 1996, Cabrera was arrested in Florida and charged
with attempting to smuggle cocaine into the United States; he
was later sentenced to 19 years in prison.84 After
the arrest, there were reports in the press that Cabrera had a
previous criminal record at the time he was invited to the
White House in late 1995. In 1983, he pleaded guilty to
conspiracy to bribe a grand jury witness and served 42 months
in prison. In 1988, he was charged with overseeing a narcotics
ring, but pleaded guilty to income tax evasion and served a
year in prison. On another occasion, he was charged with
racketeering and drug distribution, but not
convicted.85 (Cabrera is also suspected of ties to
Cuban leader Fidel Castro; 86 those alleged
connections are being investigated by the House Government
Reform and Oversight Committee.87)
When Cabrera's criminal record was publicized, Leon
Panetta, then Chief of Staff in the White House, asked other
White House staff members to ``meet with Secret Service to find
out how a decision was made to allow a convicted felon to `run
round' the White House,'' according to notes taken by an
aide.88
The Secret Service responded that Cabrera had been allowed
to enter the White House because the cases that turned up on a
law enforcement database indicated that he did not pose a
physical threat to the First Family.89 Secret
Service procedures do not automatically call for the exclusion
of visitors because they have criminal records (see Chapter
26).90 Instead, the Secret Service determines
whether criminal records of proposed visitors would suggest
that the individual may pose a physical threat to the President
or other White House officials. The Secret Service is
prohibited by law from telling the White House staff about any
proposed visitor's criminal record, and therefore did not
inform the White House of the information they obtained
regarding Cabrera.91
The DNC, however, could have learned about Cabrera's
background if it had conducted an on-line search of the press
via Lexis-Nexis,92 but it apparently failed to do
so. DNC spokeswoman Amy Weiss Tobe admitted, ``We were not
doing the proper vetting of guests at our events. We regret
that this happened, but we have a process in place now where
the mistakes of the past will not be the mistakes of the
future.'' 93
Grigori Loutchansky
According to press reports, Grigori Loutchansky is the
president of Nordex, a trading company in Vienna that
specializes in doing business in the former Soviet Union. He
was born and raised in the Soviet Union, but currently holds an
Israeli passport. In October 1993, Loutchansky attended a
Democratic Party dinner as the guest of Sam Domb, a New York
real estate developer and DNC donor. The dinner was not held in
the White House, but was attended by President Clinton and Vice
President Gore. Loutchansky reportedly chatted briefly with the
President and had his picture taken. Loutchansky later told
reporters that the President asked him to convey a message to
the president of Ukraine, asking him to reduce that country's
nuclear stockpile.94 A senior official of the
National Security Council, however, told the Committee that
Loutchansky's assertions were not accurate.95
In 1995, the DNC invited Loutchansky to a fundraising event
at the Hay Adams Hotel in Washington, at the suggestion of Sam
Domb. DNC Finance Director Richard Sullivan contacted Karen
Hancox, Deputy Director of the White House Office of Political
Affairs, and expressed concerns about Loutchansky. Hancox
contacted the National Security Council, which recommended that
Loutchansky not attend the event.96 Hancox passed
this information on to Sullivan 97 and he asked Domb
to rescind the invitation to Loutchansky, which he
did.98
In July 1996, Time magazine reported that Loutchansky was
under investigation by law enforcement and intelligence
agencies in the United States and other countries. He was
suspected of involvement in arms-trafficking, money-laundering,
and other crimes, but had not been charged.99
Shortly before the November election, the Republican National
Committee issued a press release based mainly on that article,
criticizing the President for having met with Loutchansky three
years earlier. The RNC press release failed to mention that the
allegations against Nordex had not been reported in the press
when Loutchansky was invited to the 1993 dinner, nor did it
mention that he had never attended an event in the White House
or any DNC event after 1993. The press release also insinuated,
without any substantiation, that Loutchansky had contributed
money to the DNC.100
Wang Jun
Wang Jun is a Chinese citizen and the son of Wang Zhen, a
high-ranking Chinese government official.101 Wang
Jun is the chairman of China International Trust and Investment
Corporation (``CITIC''), the chief investment arm of the
Chinese government. He is also reportedly the chairman of the
China Poly Group, an arms-manufacturer.
On February 6, 1996, Wang attended a White House coffee at
the invitation of Yah Lin ``Charlie'' Trie, at which President
Clinton was in attendance.102 Shortly after the
coffee, Poly Technologies was implicated in smuggling weapons
into the United States and Wang was described in press reports
as an ``arms dealer.'' 103
Although the President and the DNC acknowledged that Wang's
attendance at the coffee was ``clearly inappropriate,'' neither
the DNC nor the White House notified the NSC about this
invitation in order to receive information about Wang before he
attended the event.104 Moreover, Wang's role in
China Poly and its Poly Technologies unit is not clear, despite
his title as chairman of China Poly, according to Robert
Suettinger, Director of Asian Affairs in the National Security
Council. Suettinger informed the Committee that Wang is
generally associated with CITIC, not with Poly
Technologies.105
CITIC, a $20 billion conglomerate, serves as the chief
investment arm of China's central government with ministry-
level status on the Chinese State Council.106 CITIC
is guided by a 13-member CITIC International Advisory Council,
whose board members include prominent Americans including
former Secretary of State George Shultz and Maurice Greenberg,
chairman of a American International Group, a major insurance
firm.107 CITIC companies have received more than
$200 million worth of financing from the Export-Import Bank of
the United States. CITIC has forged business partnerships with
a variety of U.S. firms, including Westinghouse, Bechtel, and
Chase Manhattan. Two months after appearing at the White House
coffee, Wang hosted a dinner in Beijing attended by former
President Bush and Brent Scowcroft, President Bush's former
national security advisor.108 Wang calls Henry
Kissinger ``a good friend.'' 109 During the hearing,
Senator Glenn observed that Wang was ``a key figure for
virtually any U.S. company interested in major economic
involvement in China.'' 110 Senator Glenn noted that
former Secretary Shultz has been quoted as saying that he
attended CITIC's advisory council meeting in 1996 and that he
planned to attend the 1997 meeting as well. Senator Glenn
described Secretary Shultz as ``one of the finest people to
serve in Government . . .'' 111
After the arms-dealing allegations were publicized, the
White House determined that Wang Jun had not been vetted by the
NSC (there had been only a ``summary background check'' by the
DNC). The NSC was then asked what it would have recommended if
it had performed a background check. Suettinger of the NSC
stated in his interview that he believes that if he had been
consulted he would have recommended against Wang attending a
DNC event because of Wang's ``business connections, not his
ties to the Communist government'' of China.112
Yung Soo Yoo
Yung Soo Yoo is a Korean-born American
citizen.113 He is a resident of New Jersey and owns
Vitac Optical Inc., a company which imports optical
lenses.114 In 1991, he attended a state dinner in
the Bush White House. Throughout the 1990s, he contributed to a
wide range of Republican committees and candidates.
In 1977, Yoo testified before a House of Representatives
subcommittee that he had worked with the Korean Central
Intelligence Agency in an unsuccessful attempt to prevent
Korean witnesses from cooperating with a congressional
investigation into ``Koreagate.'' 115 This was a
scandal involving attempts by the South Korean government to
acquire influence in Washington by, for example, bribing
members of Congress.
In 1984, Yoo was found guilty under 18 U.S.C. Sec. 1014 of
committing bank fraud.116 The scheme involved his
sale of substandard coal to the South Korean government in
1982, and making false statements to a U.S. bank to obtain $4
million from an international letter of credit. Yoo's appeal of
the conviction was rejected.117 He subsequently paid
a $10,000 fine.118
Yoo has been active in Republican circles for several
years. In 1988, he contributed $1,000 to the Bush presidential
campaign and $6,000 to the Republican National
Committee.119 He gave $4,500 to the President's
Dinner in 1990.120 He attended a 1991 State Dinner
at the White House hosted by President Bush for South Korean
President Roh Tae Woo, and was actively engaged in Republican
fundraising during the 1992, 1994, and 1996 election
cycles.121
In 1992, Yoo raised campaign funds in the Korean-American
community for President Bush and Senator Alfonse D'Amato of New
York and held a fundraiser for Senator D'Amato which was
attended by President Bush.122 He also raised money
for Representative Jay Kim of California and, according to
federal prosecutors, was the middleman in a scheme to funnel
illegal corporate contributions to the Congressman (see Chapter
8).123 In 1994, Yoo served on the transition team
for George Pataki, the Governor-elect of New York, and as the
chairman of the International Trade Subcommittee of New Jersey
Governor Christine Todd Whitman's economic task
force.124
In 1994, Yoo donated $2,000 to Senator
D'Amato.125 Two years later, at Yoo's suggestion,
Chong Hwang, then the president of the Korean Apparel
Manufacturers Association (``KAMA'') donated $5,000 in KAMA
funds to Senator D'Amato and persuaded 23 KAMA members to
purchase $11,500 worth of tickets to a fundraiser headed by
D'Amato. As a result, Korean-American factory owners were able
to meet with a Pataki aide and as well as Edward McElroy, a
director of the Immigration and Naturalization
Service.126 Hwang was later removed as president of
KAMA because of the unauthorized contributions to Senator
D'Amato.127
Yoo and Senator D'Amato were scheduled to co-chair a
fundraiser for Senator Jesse Helms of North Carolina on October
11, 1996, but the event was abruptly canceled the morning it
was to take place.128 Yoo and his wife did, however,
donate $2,000 to Helms and $1,000 to the North Carolina Victory
Committee in 1996.129
Michael Kojima
Michael Kojima, a Japanese-born U.S. citizen, contributed
$500,000 to the Republican Party in 1992--the largest
contribution to that event--and was rewarded with a seat at the
head table, next to President Bush, as discussed in Chapter 6
of the Minority Report.
After the 1992 dinner, news organizations published reports
strongly suggesting that Kojima did not make the $500,000
contribution from his own funds. His business was small and
apparently struggling. He owed large sums of money to
creditors, and he had failed to pay child support to two ex-
wives. The Republican Party eventually was forced to share some
of the $500,000 with Kojima's creditors, but it insisted on
keeping the rest, brushing aside evidence that Kojima was
probably a conduit for other donors, most likely businessmen in
Japan.
The Republican Party not only provided Kojima with access
to President Bush, but a party official wrote several letters
on Kojima's behalf, helping him secure meetings with U.S.
embassy and consular officials. The RNC even tried to help him
get appointments with foreign heads of government.
CONCLUSION
Johnny Chung has asserted in unsworn statements to
journalists that he was provided with access to the White House
as an explicit quid pro quo for political contributions. He
specifically linked a $50,000 contribution to his attendance,
with some foreign visitors, at a presidential radio address.
Although the evidence presented to this Committee does not
support those assertions, Chung's access was to the White House
was inappropriate and was probably influenced by his status as
a major DNC donor.
The Committee found no evidence that Margaret Williams
traded access for contributions or that her activities violated
federal laws prohibiting the solicitation of contributors on
federal property.
Several individuals involved in controversial activities
have been afforded access to senior administration figures in
both the Clinton and Bush Administrations. This was largely the
fault of inadequate vetting procedures used by the White House
and the national political parties. This problem should
diminish, since, as noted elsewhere in this Minority Report,
the White House and DNC have now tightened their vetting
procedures.
footnotes
1 Los Angeles Times, 3/1/97; New York Times, 2/22/97.
2 New York Times, 2/22/97.
3 New York Times, 2/22/97.
4 New York Times, 2/22/97.
5 New York Times, 2/22/97, citing interviews Chung had
given to Los Angeles business publications.
6 New York Times, 2/22/97, citing FEC records.
7 New York Times, 2/22/97, citing FEC records.
8 New York Times, 2/22/97.
9 New York Times, 2/22/97.
10 New York Times, 2/22/97.
11 Margaret Williams and Evan Ryan's offices were
located in Room 100 of the Old Executive Office Building.
12 Evan Ryan deposition, 8/7/97, pp. 11-12.
13 New York Times, 2/22/97: ``Associates [of Chung] say
he has used his impressive political access to cement business deals
with investors from China, Taiwan and Hong Kong . . . .''
14 New York Times, 2/22/97.
15 New York Times, 2/22/97.
16 New York Times, 2/22/97.
17 Time, 3/3/97.
18 Donald Fowler deposition, 5/21/97, pp. 154-55; see
discussion infra.
19 E-mail from Melanie B. Darby of the NSC, 4/7/97, EOP
5438-40.
20 E-mail from Robert L. Suettinger of the NSC, 4/7/97,
EOP 05438-40.
21 New York Times, 2/22/97.
22 New York Times, 2/22/97.
23 New York Times, 2/22/97.
24 Time, 2/24/97.
25 Los Angeles Times, 7/27/97.
26 Time, 3/3/97.
27 New York Times, 3/3/97.
28 Donald Fowler deposition, 5/21/97, pp. 154-55.
29 Donald Fowler deposition, 5/21/97, p. 323.
30 Margaret Williams deposition, 5/29/97, p. 198. She
reiterated this under oath to the Government Reform and Oversight
Committee of the House of Representatives, testifying that she did not
tell anyone at the DNC or in the President's office about Chung's
contribution, and that she did nothing, ``no matter how
insignificant,'' to help him secure an invitation to the presidential
radio address. House Government Reform and Oversight Committee Hearing
Transcript 11/13/97.
31 Margaret Williams deposition, 5/29/97, p. 198.
32 Margaret Williams deposition, 5/29/97, pp. 159-60.
33 Margaret Williams deposition, 5/29/97, p. 167.
34 Margaret Williams deposition, 5/29/97, p. 160.
35 Margaret Williams deposition, 5/29/97, p. 163.
36 Margaret Williams deposition, 5/29/97, p. 212.
37 Evan Ryan deposition, 8/7/97, pp. 74-75.
38 Time, 3/17/97, p. 20.
\39\ Los Angeles Times, 7/27/97.
\40\ Evan Ryan deposition, 8/7/97, pp. 74-75.
\41\ Evan Ryan deposition, 8/7/97, pp. 76-77.
\42\ Evan Ryan deposition, 8/7/97, p. 77.
\43\ Evan Ryan deposition, 8/7/97, pp. 84-85.
\44\ Evan Ryan deposition, 8/7/97, p. 150.
\45\ Evan Ryan deposition, 8/7/97, p. 163.
\46\ Evan Ryan deposition, 8/7/97, pp. 143-45.
\47\ 11/13/97 House Government Reform and Oversight Committee
Hearing transcript.
\48\ 11/13/97 House Government Reform and Oversight Committee
Hearing transcript.
\49\ Margaret Williams deposition, 5/29/97, pp. 181-82.
\50\ Margaret Williams deposition, 5/29/97, p. 182.
\51\ Evan Ryan deposition, 8/7/97, p. 145.
\52\ Summary of Secret Service WAVEs records relating to Chung, EOP
004560-63.
\53\ Margaret Williams deposition, 5/29/97, p. 230.
\54\ Evan Ryan deposition, 8/7/97, p. 116.
\55\ Margaret Williams deposition, 5/29/97 pp. 173-74; pp. 183-84.
\56\ Margaret Williams deposition, 5/29/97, p. 184.
\57\ Margaret Williams deposition, 5/29/97, p. 184. Ryan also
testified that Chung was very persistent and that Williams, by taking
the check from him, was saving herself from being stuck in a lengthy
conversation with Chung. Evan Ryan deposition, 8/7/97, pp. 153-54.
\58\ Margaret Williams deposition, 5/29/97, pp. 186, 233.
\59\ Margaret Williams deposition, 5/29/97, p. 232; Evan Ryan
deposition, 8/7/97, p. 155.
\60\ Margaret Williams deposition, 5/29/97, p. 174.
\61\ Margaret Williams deposition, 5/29/97, p. 184. During hearings
held by the House Government Reform and Oversight Committee Williams
reiterated that this was the first time anyone had ever come to the
office and handed her a political contribution. House Government Reform
and Oversight Committee hearing transcript, 11/13/97. No one has come
to the office to deliver her a contribution since this incident. House
Government Reform and Oversight Committee hearing transcript, 11/13/97.
\62\ Margaret Williams deposition, 5/29/97, p. 185.
\63\ Margaret Williams deposition, 5/29/97, pp. 185-86.
\64\ Margaret Williams deposition, 5/29/97, p. 186.
\65\ Margaret Williams deposition, 5/29/97, p. 232-33.
\66\ Margaret Williams deposition, 5/29/97, p. 186.
\67\ Los Angeles Times , 7/27/97.
\68\ Evan Ryan deposition, 8/7/97, p. 110.
\69\ Evan Ryan deposition, 8/7/97, p. 110.
\70\ Margaret Williams deposition, 5/29/97, p. 232.
\71\ 5 C.F.R. 734.101.
\72\ 5 C.F.R. 734.101.
\73\ Memorandum for James B. King, director, Office of Personnel
Management, from Walter Dellinger, Assistant Attorney General, Office
of Legal Counsel, p. 14 (1995) (hereinafter ``1995 DOJ Memorandum').
This opinion deals with personnel who administer the Federal Payroll
Allocation System, which permits federal employees to make voluntary
salary allotments to political action committees. According to the
opinion, those Office of Personnel Management staffers who administer
the salary-allotment procedure for PAC contributions do not violate 18
U.S.C. Sec. 607 because they are not actually receiving the money that
employees allocate to PACs.
\74\ 1995 DOJ Memorandum, p. 14 (quoting Contributions for
Political Purposes, 21 Op. Att'y Gen., 298, 300-01 (1896)).
\75\ Margaret Williams deposition, 5/29/97, p. 244.
\76\ Margaret Williams deposition, 5/29/97, pp. 244-45.
\77\ Margaret Williams deposition, 5/29/97, pp. 245-46.
\78\ Soft money contributions are not covered by the Federal
Election Campaign Act, and section 607 applies only to those
contributions that are so covered. See Chapter 24.
\79\ FEC Records.
\80\ See Letter from Attorney General Reno to Senator Orrin Hatch,
4/14/97 (regarding phone calls).
\81\ 5 C.F.R. 734.101; 1995 DOJ Memorandum.
\82\ Los Angeles Times, 12/10/96.
\83\ Los Angeles Times, 12/10/96.
\84\ New York Times, 3/22/97.
\85\ Chicago Tribune, 10/28/96.
\86\ Legal Times, 4/14/97.
\87\ Legal Times, 4/1/97.
\88\ USA Today, 12/10/96, citing notes taken by Janis Kearney.
\89\ Washington Post, 10/26/96.
\90\ Chicago Tribune, 10/28/96.
\91\ USA Today, 10/28/96; Washington Post, 10/26/96: In a letter to
Representatives Bob Livingston and Frank Wolf, Secret Service Director
Eljay Brown wrote, ``No member of the White House staff was informed of
Mr. Cabrera's criminal history as these records are for law enforcement
use only. There are no letters, memoranda, transcripts, electronic
mail, phone records, or other records detailing any communications from
the Secret Service to the White House.''
\92\ A Lexis-Nexis search would have turned up, among other things,
a UPI report dated 12/15/83 which notes that ``Jorge Luis Cabrera . . .
is charged with bribing a grand jury witness, smuggling marijuana and
engaging in racketeering.''
\93\ New York Times, 3/22/97.
\94\ Washington Post, 4/8/97.
\95\ Staff Interview with Nancy Soderberg, Advisor to the President
for National Security Affairs, National Security Council, 5/30/97.
\96\ Karen Hancox deposition, 6/9/97, p. 93.
\97\ Karen Hancox deposition, 6/9/97, pp. 55-58; see also Doug
Sosnik deposition, 6/20/97, p. 175.
\98\ Washington Post, 4/8/97.
\99\ Time, 7/8/96.
\100\ Press statement issued by RNC Chairman Haley Barbour, 11/3/
96.
\101\ Richmond Times Dispatch, 7/13/97.
\102\ AP Online, 7/30/97; New York Times, 2/3/97.
\103\ AP Online, 7/30/97.
\104\ Tampa Tribune, 2/3/97; New York Times, 2/3/97.
\105\ Staff Interview with Robert Suettinger, Director, Asian
Affairs, National Security Council, 6/3/97.
\106\ Austin-American Statesman, 3/30/97.
\107\ Austin-American Statesman, 3/30/97.
\108\ Austin-American Statesman, 3/30/97.
\109\ Washington Post, 3/16/97.
\110\ Senator Glenn, 7/9/97 Hrg., p. 154.
\111\ Senator Glenn, 7/9/97 Hrg., p. 155.
\112\ Staff Interview with Robert Suettinger, Director, Asian
Affairs, National Security Council, 6/3/97.
\113\ New York Daily News, 12/5/96.
\114\ Los Angeles Times, 8/19/97.
\115\ Los Angeles Times, 8/19/97; Washington Post, 12/1/97.
\116\ Los Angeles Times, 8/19/97.
\117\ United States v. Yung Soo Yoo, 833 F.2d 488 (3d Cir. 1987).
\118\ Los Angeles Times, 8/19/97.
\119\ FEC records.
\120\ FEC records.
\121\ Washington Post, 7/3/91; The Hill, 6/4/97; Star-Ledger, 4/15/
97.
\122\ New York Daily News, 11/21/96; New York Daily News, 4/11/97;
The Hill, 6/4/97.
\123\ Los Angeles Times, 8/19/97.
\124\ Albany (N.Y.) Times Union, 12/24/94; Bergen Record (Bergen
County, N.J.), 9/15/94.
\125\ FEC records.
\126\ New York Daily News, 11/21/96.
\127\ New York Daily News, 11/21/96.
\128\ New York Daily News, 11/21/96.
\129\ FEC records.
PART 5 FUNDRAISING AND POLITICAL ACTIVITIES OF THE NATIONAL PARTIES
AND ADMINISTRATIONS
Chapter 32: Coordination Among the White House, the Democratic National
Committee and the Clinton Campaign; Issue Ads
Since 1976, presidential campaigns have been eligible to
receive federal funds. Public financing was designed to free
presidential candidates from the need to raise money and to
assure voters that these candidates would not become beholden
to contributors. In exchange for federal funds, presidential
campaigns must agree to limit the amount of money they spend.
One purpose in enacting our campaign finance law was to put in
place expenditure limitations that would level the playing
field on which presidential candidates compete.
However, due to a series of court rulings, as explained in
Chapter 24, an enormous loophole has been created that enables
national party committees and presidential campaigns to
circumvent this spending limit. In addition to the funds that
presidential candidates may spend on their own campaigns,
national party committees are permitted to spend unlimited
amounts of money on ``issue ads.'' 1 An
advertisement sponsored by a party qualifies as an issue ad as
long as it does not contain an electioneering message
advocating the election or defeat of a specific candidate. A
cleverly worded ad can meet this standard even though it
portrays a candidate in a positive (or negative) light. The law
also permits a presidential candidate to help his party raise
money for issue ads and to control the content and production
of these advertisements.
---------------------------------------------------------------------------
Footnotes appear at end of chapter 32.
---------------------------------------------------------------------------
By running issue ads, political parties and presidential
campaigns are legally able to circumvent the federal law
mandating that a presidential candidate can raise and spend
only hard money (contributions in small dollar amounts raised
from individuals and political action committees) prior to the
party's convention without violating the law.2 In
contrast, during the 1996 election cycle, the political parties
were free to pay for issue ads with a combination of hard and
soft money.3 In the upcoming election cycle, it may
be possible for parties to pay for issue advertisements with
only soft money.4
In 1996, both the Clinton campaign and the Dole campaign
made use of the loophole allowing a national party committee to
spend unlimited soft dollars on issue advertising. Both
presidential candidates helped their parties to raise hard and
soft money, which was used to pay for issue ads, and both
presidential campaigns assisted the party committees in
creating ads that were designed to bolster support for the
party's presidential candidates. Although a number of RNC ads
came close to not meeting the legal standard for issue
advocacy, neither party's ads appeared to carry an
electioneering message advocating the election or defeat of its
presidential nominee and, thus, were not subject to the federal
spending limits that apply to presidential campaigns. The
Clinton and Dole for President campaigns were thus able to
legally circumvent federal spending limits.
FINDINGS
(1) Both the Clinton campaign and the Dole for President
campaign benefited from spending by their respective parties in
excess of the spending limits applicable to presidential
candidates who accept public financing.
(2) Coordination of issue advocacy between the Clinton
campaign and the DNC and between the Dole for President
campaign and the RNC was legal under current campaign finance
laws.
(3) Both presidential campaigns coordinated fundraising to
pay for the issue advocacy of their respective parties.
INTRODUCTION AND SUMMARY
During the 1996 election cycle, the DNC paid for a
multimillion-dollar issue advocacy effort that was designed to
build support for the Democratic Party's position on major
legislative issues and to bolster support for President
Clinton. The Clinton campaign organization and its consultants
actively participated in all stages of this media effort. White
House Deputy Chief of Staff Harold Ickes played a major role in
the reelection effort, of which the ads were a key part.
The activities of the DNC and the Clinton campaign were
permissible. Federal law explicitly sanctions coordination
between political parties and their presidential
candidates.5 The law also permits parties to pay for
and air issue ads that are intended to aid their presidential
candidate as long as the ads do not carry an electioneering
message advocating the election or defeat of a specific
candidate. The DNC's ads, which all related to pending
legislative issues, satisfied this issue-advocacy standard.
THE ORIGIN OF THE DNC'S ISSUE AD CAMPAIGN
The Clinton campaign and the DNC first considered the
possibility of using issue ads to communicate the President's
message in the first half of 1995.6 Democratic
strategists felt that one of the reasons the party lost
Congress in 1994 was that it had not been successful in
communicating its message. After discussions involving the
President and his advisers, a decision was made to conduct a
major radio and television advertising effort in 1995 and 1996.
Richard (``Dick'') Morris, the Clinton campaign's media
consultant, suggested that the campaign not accept federal
matching funds so that it would not be limited by the federal
cap on campaign expenditures.7 In early 1995, the
Clinton campaign organization rejected Morris's suggestion and
agreed to accept federal funds. It is unclear whether, at the
time this decision was made, the DNC and the Clinton campaign
had planned to spend money on issue ads not subject to the
expenditure cap.
The first-1996 cycle televised ads ran in July 1995 when
the Clinton campaign paid for a series of advertisements that
addressed the crime issue.8 Dick Morris explained
the original conception of the advertising campaign:
[I] found out that you could run advertising that was
related to issues that did not explicitly urge the
election of a candidate, I realized that was precisely
what I had in mind anyway. . . . So it was not a
question of finding a loophole in which we could
restructure the advertising to achieve a different goal
in a different way in order to get under the DNC label.
. . . Specifically, I was not very concerned in the
early part of '95 or throughout most of ``95 with the
president's re-election per se, because I felt that for
the president to have a hope of being reelected, he
first had to win the fight over the budget. He first
had to defeat the agenda of the Gingrich-Dole Congress
and win the battle associated with the budget and tax
issues. . . . So that when I found out that there was a
kind of advertising . . . that could be done that was
congruent with my political purposes at that point,
which was to win an issue before the Congress, I was
thrilled.9
In a September 1995 meeting, the President, the Vice
President, the First Lady, Harold Ickes, Senator Christopher
Dodd, DNC Chairman Donald Fowler, and White House aide George
Stephanopoulos decided that the DNC should undertake an
extensive media effort to communicate the message of the
President and the party.10
The televised ads, which aired steadily throughout the fall
of 1995 and early 1996, focused on the President's refusal to
support Republican budget proposals and the President's
determination to protect Medicare.11 These issues
were among the most important pending before the United States
Congress at the time. Although Haley Barbour, then Chairman of
the RNC, initially vowed not to spend Republican hard dollars
on a similar advertising effort, in November 1995, the RNC
began airing advertising attacking President Clinton and his
position on the balanced budget.12 In addition, in
mid-1995, the RNC helped create a tax- exempt organization,
Coalition for Our Children's Future, to air balanced budget and
Medicare advertising with entirely undisclosed and unregulated
soft money, in contrast to the publicly disclosed combination
of hard and soft money being used by the DNC (see Chapter 13).
THE DNC AND RULES GOVERNING ISSUE ADS
Before the DNC began its million-dollar issue advertising
effort, counsel for the DNC and the Clinton campaign advised
their clients that the DNC's plan complied with existing law.
Ickes explained, when he was questioned by Senator Akaka during
a Committee hearing:
Q: In response to questions earlier today, you
testified that you consulted counsel on the ability to
use soft money for issue ads during 1995, did you not?
A: Certainly did.
Q: What were you told were the parameters of the
advertising that could be done with soft money?
A: I was concerned, Senator, because I wanted to make
sure that whatever advertising was done by the DNC
using both hard and soft money, because a mix is
required, would not be attributed to the spending
limits of the Clinton campaign. That is why I did
consult counsel, and I was told by counsel that under
the Federal Election Campaign Act, as amended by the
Congress in '78 or '79 and as interpreted by the FEC,
that these kinds of ads, the so-called issue ads, could
be run by the DNC and would not be attributed to the
campaign, that they were perfectly legal. . . . And, in
addition, we had lawyers looking at each script and
each ad as it was cut before it went on the air, with
the exception of one which we had to pull.
Q: So soft money, which under current federal
election laws can be raised in unlimited amounts from
any type of contributor, including corporate
contributors, may lawfully be used to advertise the
president's message without much limitation. Is that
right?
A: That's right, and it depends upon the content of
the ad. And, again, Senator Lieberman and I have had a
colloquy about this. I think this is something that has
to have a very sharp look-at.13
As Chapter 24 details, counsel, along with Ickes were
correct regarding the legal requirements for party issue ads.
These ads are permissible and do not count against a
presidential campaign's spending cap as long as they do not
cross the line into advocating the election or defeat of a
specific candidate. Courts disagree about where to draw the
line between issue ads and candidate ads. Courts have held that
an ad does not advocate the election or defeat of a candidate
unless it uses words such as ``vote for,'' ``elect,''
``support,'' ``cast your ballot for,'' ``Smith for Congress,''
``vote against,'' ``defeat,'' or ``reject.'' One circuit has
held that an ad that does not use these so-called magic words
can nevertheless cross the line between an issue ad and
candidate ad if it unmistakably urges voters to elect or defeat
a specific candidate.
Counsel placed limits on the types of ads that the DNC
could run that were stricter than either of these legal
standards. Counsel also attempted to ensure that the ads did
not contain an ``electioneering message,'' a currently
undefined standard, by ensuring that the advertsiments
mentioned no campaign or election and were not run within six
weeks of a state primary. No DNC advertsing was aired during
the general election period. Dick Morris described these
limits:
Sandler and Utrecht . . . said that issue advocacy
advertising had to relate to an important . . .
legislative issue that was pending before the Congress,
that was actively in play and discussion before the
Congress. It had to express the view on that issue
which was held by the President, the administration in
general . . . and the leadership of the Democratic
Party; that it had to be an issue position in which the
Republican Party leadership took a generally different
point of view. . . . I further learned from Sandler and
Utrecht that the advertisements . . . could not overtly
urge the re-election of the President or the defeat of
any particular Republican candidate. I further learned
that there were constraints on the extent to which the
President's picture could be used in the advertisements
or the picture of possible Republican opponents could
be used in the advertisements. I further came to learn
that there were restrictions on the proximity to the
primary dates that such advertisement could be run in
different states.14
The rules established by counsel for the DNC and the Clinton
campaign were stricter than the FEC opinions and court rulings
distinguishing issue and candidate ads.
THE DNC ADHERED TO THE LEGAL RULES GOVERNING ISSUE ADS
The ideas for specific DNC issue ads originated in regular
Wednesday evening strategy meetings at which the President, top
White House staff, and the media consultants planned campaign
activities, including the use of advertising.15 At
the Wednesday meetings, President Clinton approved the concepts
for DNC ads. ``Creative meetings'' attended by, among others,
Dick Morris and DNC Counsel Joseph Sandler, took place the day
after these strategy meetings. Participants at the ``creative
meetings'' developed ad themes and scripted ads. On occasion,
they changed ad themes that the President had approved in a
strategy meeting, and final ads were often cut and aired
without receiving the President's approval. DNC counsel, and on
occasion, Clinton campaign counsel attended these creative
meetings in order to ensure that every DNC ad adhered to the
limits they had imposed and therefore fell within the legal
definition of issue advocacy and did not contain an
electioneering message.16
Dick Morris testified that the DNC followed the guidelines
established by counsel ``to the letter--to the comma.''
17 He complained that the lawyers were
``obsessively'' concerned with following the law:
[T]hey would bend over backward in ways that I
considered ridiculous to comply with what would have
been [an] overly conservative interpretation of the
law. As I mentioned, there was a time in which the
Republicans were running ads bashing Clinton, and
Utrecht and Sandler told us that we couldn't run ads
bashing Dole because he had retired from the Senate.
And I said you are disarming us unilaterally; this guy
is on the air, spending 3 million bucks a week savaging
Clinton, and you won't let us go on the air with our
measly million defending him, or attacking Dole,
because you're telling me that it's illegal. Well, if
it's illegal for us, why isn't it illegal for them? . .
. And constantly during this process, I felt that
Sandler and Utrecht were overly conservative in their
interpretation.18
Morris was particularly angry that the Dole campaign and
the RNC were not operating under the restrictions that counsel
had imposed on the DNC:
[T]he Republicans had a 60-second commercial which
was entirely positive about Bob Dole. It talked about
how he was born on a farm, and he grew up in Kansas,
and everybody in this town knew him and loved him, and
he was a war hero, and he'd been wounded; and it did
not in the course of the entire ad mention a single
public policy issue, whether or not the issue was
before Congress or not, to my recollection. And that
was paid for as an issue advocacy RNC ad.
And when I asked Sandler and Utrecht permission to
run a positive Clinton commercial that related to
Clinton's personal life and background and all that,
they said we're going to have to do that with Clinton
money if we do it; and they were constantly editing out
of my manuscripts and my texts any references to
Clinton that were not within the direct four walls of
legislative advocacy.
And when the Dole ad came on, I screamed bloody
murder, because I said they are violating every rule
you've made me follow. That was the most blatant
example. There was no issue content in the
ad.19
Because the DNC's ads complied with counsel's guidelines,
which were stricter than the legal requirement that issue ads
refrain from advocating the election or defeat of a specific
candidate, they were permissible under current law. As the next
chapter discusses in greater detail, although the RNC's issue
ads were also permissible, the ads came much closer to crossing
the line between issue advocacy and candidate advocacy.
THE CLINTON CAMPAIGN AND THE DNC CAMPAIGN
Even though the DNC's ads were permissible, they were
clearly designed to aid the Clinton campaign. As Harold Ickes
testified at this Committee's hearings:
Q: Would you say that people looking at the ads--and
I am sure you looked at the Dole spots as well--would
take the message, the average person, that this is very
good person who we should vote for next year?
A: I would certainly hope so. If not, we ought to
fire the ad agencies.20
Because the cost of DNC issue ads did not count as expenditures
by the Clinton campaign, theDNC's media effort allowed the
Clinton campaign to benefit from favorable advertising without
depleting its scarce, federally-capped campaign coffers. The DNC's
advertisements were shown in states considered key to the President's
reelection, and funds were transferred from the DNC to the state
parties in order to take advantage of the state parties' ability to
spend a larger percentage of soft money on the advertisements. While
the transfers were made to take advantage of the state parties' greater
ability to spend soft money, there are no restrictions on this type of
transfer.21 As Chapter 33 explains, the RNC and Dole for
President campaign engaged in similar activities. Although the
practices engaged in by both parties are permissible, they violate the
spirit of the campaign finance laws, which are designed to limit the
spending of presidential campaigns.
THE LEGALITY OF COORDINATION AMONG THE CLINTON CAMPAIGN, WHITE HOUSE,
AND DNC
The President's role in the making of DNC issue ads
President Clinton played a significant role in the DNC's
issue-advocacy effort. He attended weekly strategy sessions
with Senator Dodd and DNC Chairman Donald Fowler and he
approved the concepts for a number of DNC issue ads. President
Clinton and Vice President Gore also devoted a significant
amount of time to raising money for the DNC's media effort.
Some Committee Members have raised concerns that the
President's involvement in the making of issue ads may have
been illegal.22 They point in particular to a video
tape in which, in discussing the DNC's issue-advocacy campaign,
the President says: ``And then we realized we can run these ads
through the Democratic Party.''
However, the President is permitted to be involved in
strategic decision making, and fundraising on behalf of the
party. As discussed in Chapter 24, federal law not only
permits, but explicitly sanctions this cooperation between
candidates, including Presidential candidates, and their
political parties. The Federal Election Campaign Act and its
regulations recognize the unique role of President with regard
to the party and allow a presidential candidate to go so far as
to ``designate the national committee of [his or her] political
party as his or her principal campaign committee.''
23 If President Clinton had exercised his right to
choose the DNC as his campaign committee, then he would have
been able not only to coordinate with the DNC or to control
some of its activities, but the party and the President would
have become one entity. The President is legally entitled to
have a say in the activities and operation of the national
party.
Attorney General Reno correctly stated the current law in
her April 1997 testimony before the Senate Judiciary Committee.
She stated, ``one of the things I want to make clear--
coordination is never prohibited. And, in fact, issue
advertising may be paid for in part by soft money with
coordination, even with coordination.'' 24
Republican election-law experts agree that President
Clinton's involvement in the making of the DNC issue ads was
permissible. Republican election law expert Jan Baran, stated
that the courts have interpreted the law to allow political
parties to coordinate with candidates and pay for issue ads
with soft money. He dismissed the significance of the videotape
in which the President admitted to running ``ads through the
Democratic Party,'' stating that ``He [Clinton] is confirming
the legally obvious. To me it has no legal significance.'' When
asked about the possibility that the President could be accused
of committing a crime for being involved in the issue ads
placed by the DNC, Baran said, ``Are you going to throw
somebody in jail for violating a law no three people can agree
on?'' The answer is ``of course not.'' 25
Senator Dole himself has stated clearly that parties and
presidential candidates can coordinate their activities. Asked
about the RNC's issue ads, he took the same position that
President Clinton took with respect to DNC issue ads, and used
almost identical language: ``[W]e can, through the Republican
National Committee, through what we call the Victory '96
program, run television ads and other advertising.''
26
Ickes's role in coordinating with the DNC
Harold Ickes was heavily involved in the activities of the
DNC while he was White House Deputy Chief of Staff. Ickes's
actions were legal, as were similar activities by White House
officials in Republican administrations.
Ickes's involvement with the DNC traces back to the
September 1995 meeting at which the DNC and Clinton campaign
officials decided that the DNC would undertake an issue-
advocacy effort. At this meeting, the President and Vice
President committed to devoting time to raise money for the
DNC's media effort.27 Thereafter, the President and
the Vice President spent more time on fundraising activities to
assist the DNC's efforts to raise the soft money needed to pay
for the issue advertisements. The President and the Vice
President attended many fundraising events for the DNC and the
Vice President made phone calls to help raise soft money for
the media fund.
Involving the President in fundraising for the DNC required
the White House to maintain frequent contact with the party.
Ickes was the primary White House-DNC liaison. Although he
became involved in many DNC activities, his involvement was
generally related to ``big picture'' issues, such as scheduling
the President and monitoring the DNC's finances.28
Ickes also took part in DNC personnel decisions, including
those related to the transfer of staff between the DNC and the
Clinton campaign. Donald Fowler, national chairman of the DNC,
testified that he viewed the President as the leader of the
party and Ickes as the person who communicated the President's
views to DNC personnel.29 Accordingly, Ickes was
expected to and did have involvement in campaign activities,
including the coordination of the issue advocacy efforts of the
DNC and the raising of soft money to pay for such ads.
Beginning in the fall of 1995, Ickes attended weekly
meetings with political and scheduling staff from the White
House (including Doug Sosnik and Karen Hancox) and seniorDNC
staff (including Donald Fowler, B.J. Thornberry, Marvin Rosen, Brad
Marshall, Scott Patrick, and Richard Sullivan). Attendees discussed the
DNC budget and the scheduling of the President's and Vice President's
participation in fundraisers.
The participation of a deputy chief of staff in such
gatherings is hardly unprecedented. During the 1984 campaign,
President Reagan's chief of staff, James Baker, III,
participated in similar meetings. As Harold Ickes noted:
In 1983, White House chief of staff, James Baker,
began holding weekly political meetings in his White
House offices, again, including White House staff, the
staff of the RNC, the re-election campaign, and
campaign consultants. Known as the Campaign Strategy
Group, its reported purpose was to guide President
Reagan's re-election campaign and to coordinate the
activities of the RNC and other Republican Party
resources.30
Indeed, Ickes modeled his involvement with the DNC on the
activities of Republican administrations. Ickes testified:
[M]ost of the White House staff may participate in a broad
range of political activities in their offices.
In this regard, much has been made of my role with respect
to the elections while I served as deputy chief of staff of the
White House. Among my numerous duties, I served as the
president's point man on both the DNC and the re-election
campaign, and I met regularly with campaign and DNC officials.
And the Office of Public--the Office of Political Affairs
reported to me.
This was the model established by my Republican
predecessors. Indeed, it was President Reagan and his then
Chief of Staff James Baker who officially established the
Office of Political Affairs in the White House. Its functions
were continued under President Bush and were inherited by the
Clinton White House.
According to the National Journal, the Reagan White House
political office was, and I quote, ``structured along the lines
of a miniature campaign organization.''
Under its first director, Lyn Nofziger, the Office of
Political Affairs had, and I quote, ``specific links to the
Republican National Committee and the House and Senate GOP
campaign units . . . [so] that all elements of the party
apparatus [would] have a designated contact in the White House
. . .''
In late 1981, Mr. Nofziger announced he was leaving the
White House, but not before the general election strategy had
been planned for the 1982 elections.
As Mr. Nofziger explained: ``The idea [was] to make sure
that the White House bestowed its favors--campaign appearances,
endorsements, coordination of grant announcements--in the most
effective way possible.''
And according to Mr. Nofziger, ``We had a full time team of
political operatives working for us--essentially our consulting
firm--the White House could respond quickly and decisively to
problems as they cropped up.''. . .
President Reagan's next director of the Office of Political
Affairs, Ed Rollins, held regular weekly meetings in the Old
Executive Office Building next to the White House, which
included White House staff and top staff from the Republican
National Committee, the National Republican Senate Committee,
and the National Republican Congressional Committee. Their
purpose was to obtain Republican victories in the 1982
congressional elections.
To this end, the National Journal reported, ``Rollins'
office has been established as a place where Republicans in
Congress can come to request Presidential favors. In the past
16 months,'' according to Mr. Rollins, ``we worked very hard to
produce the perks that members want. This has been the shop
that has fought to get their appointments and their advisory
commission people, the things that we feel are important to
them for getting re-elected.''
* * * * *
During 1984, Mr. Baker established a second campaign group
known as the Implementation Group, which he also chaired and
which also met in his White House offices.
It was reported, and I quote, ``Overall authority for
directing the 1984 re-election campaign was clearly vested in
White House chief of staff, James A. Baker, III, eliminating
coordinating problems between the White House and campaign
staffs, that plagues campaigns of prior, previous incumbents.''
At that same time, Lee Atwater was the deputy director of
the Reagan-Bush re-election campaign, but as he stated, Mr.
Baker controlled the campaign. I quote Mr. Atwater, ``Having
Jim Baker as the key domo in this whole operation is a big
plus. Rollins and I do not question his supremacy. We are very
loyal to him, and we all work very well together.''
Mr. Baker went on to play this role as well in the 1992
Bush re-election campaign. President Bush persuaded Mr. Baker
to resign as Secretary of State and to assume the role of chief
of staff to the President operating out of the White House. He
was put in charge of both the White House staff and President
Bush's re-election campaign, and Mr. Baker eventually chaired
twice daily campaign meetings in his White House offices.
According to reliable reports, President Bush's national
security advisor, General Scowcroft, attended those meetings.
Thus, in having the White House actively involved in campaign
matters, the Clinton White House merely followed well-
established Republican precedent. . . .31
Ickes's involvement with the DNC not only follows the
precedent set by Republican administrations, but, more
importantly, complies with federal law. Coordination between
the party and the campaign is expected, and federal election
law presumes that coordination occurs. Also, as Chapter 24
explains, the Hatch Act's prohibition on federal employees'
engaging in political activity does not apply to White House
personnel, such as Harold Ickes, who are paid from
appropriations for the Executive Office of the President. The
law permitted Ickes to engage in political activity during
working hours, in a federal building, and using federal
property as long as the activity did not involve soliciting or
accepting contributions and incurred no cost to the government.
Ickes complied with these restrictions.32
CONCLUSION
The fact that coordination of soft money spending and
fundraising has become commonplace and expected should be
examined by Congress. By permitting such coordinated efforts to
raise soft money and spend it on political activities that
advance the interests of presidential campaigns, the federal
election laws create a tremendous loophole to both contribution
limits and spending limits. As the Chairman has acknowledged:
Acceptance of this activity would allow any candidate
and his campaign to direct and control the activities
of a straw man through which the campaign could draft,
revise, and place advertisements meant to benefit the
particular Federal campaign. For such activity, these
straw men could use funds subject to no limit and
derived from any source. . . . If the interpretation is
that this is legal and this is proper, then we have no
campaign finance system in this country
anymore.33
The fact that the national parties and presidential
campaigns can legally coordinate issue ads paid for, in part,
by unlimited soft money undermines the system of regulating the
financing of presidential elections. The spending limits
applicable to presidential campaigns that accept matching funds
are meaningless when unlimited party soft money can be spent on
the campaign. During the 1996 election cycle, the irrelevance
of the spending limits was demonstrated by the fact that
hundreds of millions of dollars over and above the limits was
spent on issue advocacy efforts that were designed to advance
the presidential tickets. By reducing or, preferably, banning
soft money, Congress could close this loophole and give meaning
to the spending limits imposed on presidential campaigns.
Footnotes
\1\ FEC Advisory Opinion 1995-25.
\2\ Under the federal election laws, an individual is allowed to
give a maximum of $2,000 to a candidate ($1,000 each for the primary
and general election) during any one cycle. A political action
committee (``PAC'') can give $5,000. Contributions from corporations
and labor unions are forbidden. 2 U.S.C. sections 441a and 441b.
\3\ FEC Advisory Opinion 1995-25.
\4\ See Federal Election Commission Matter Under Review 4246,
released 1997. But see Statement of Reasons issued by Commissioners
McGarry and Thomas in MUR 4246.
\5\ See Chapter 24.
\6\ Richard Morris deposition, 8/20/97, p. 78.
\7\ Richard Morris deposition, 8/20/97, pp. 98-100.
\8\ Richard Morris deposition, 8/20/97, p. 131.
\9\ Richard Morris deposition, 8/20/97, pp. 135-36.
\10\ Donald Fowler deposition, 5/21/97, p. 292-95.
\11\ See Annenberg Public Policy Center, ``Issue Advocacy
Advertising During the 1996 Campaign: A Catalog,'' 9/16/97, p. 32.
\12\ The Hotline , 11/17/95; The Hotline, 1/6/95.
\13\ Harold Ickes, 10/8/97 Hrg., pp. 164-65.
\14\ Richard Morris deposition, 8/20/97, pp. 143-44.
\15\ Participants at these meetings included the president, the
vice president, Leon Panetta, Harold Ickes, Evelyn Lieberman, George
Stephanopoulos, Don Baer, Doug Sosnik, Ron Klain, Sandy Berger, Senator
Chris Dodd, John Hilley, Maggie Williams, Mike McCurry, Henry Cisneros,
Mickey Kantor, Mack McLarty, Peter Knight, Anne Lewis, Ron Brown,
Erskine Bowles, Jack Quinn, Dick Morris, Doug Schoen, Mark Penn, Bob
Squier, and Bill Knapp. Richard Morris deposition, 8/20/97, p. 76.
\16\ Joseph Sandler deposition, 8/22/97, pp. 67-69; Richard Morris
deposition, 8/20/97, pp. 76, 140-44.
\17\ Richard Morris deposition, 8/20/97, p. 409.
\18\ Richard Morris deposition, 8/20/97, p. 410.
\19\ Richard Morris deposition, 8/20/97, pp. 411-12.
\20\ Harold Ickes, 10/8/97 Hrg., p. 79.
\21\ 2 U.S.C. section 441a(a)(4). The allocation regulations
adopted in 1990, which determine how much hard and soft money national
and state parties may use, place no restrictions on transfers between
parties for any purpose.
\22\ At this Committee's 10/22/97 hearing Chairman Thompson said:
``The President acknowledges that spending on campaign advertising is
limited by law, but he and his advisors, so he tells the assembled
contributors who are being asked to pay for these ads, say that they
have found a way that they could raise and spend money through the
Democratic National Committee; that they could run these ads through
the DNC. Indeed, the President credits his DNC advertising, which they
and the White House directed and controlled, with having improved his
performance by 10 to 15 points in key States where the President is
hopeful of garnering additional Electoral College votes. We now know
about how the President saw the DNC ads functioning as an integral part
of his re-election strategy. . . . To allow the type of activity
undertaken by the Clinton '96 campaign in conjunction with the DNC
undermines the entire Federal election campaign regulatory system.
Acceptance of this activity would allow any candidate and his campaign
to direct and control the activities of a straw man through which the
campaign could draft, revise, and place advertisements meant to benefit
the particular Federal campaign. For such activity, these straw men
could use funds subject to no limit and derived from any source.
Furthermore, these straw men would not be subject to any overall
expenditure limit. To tolerate such blatant manipulation of the system
would perpetuate a ruse on the American taxpayer. Those taxpayers are
being told that in return for over $233 million in their money, they
got an open, above-board system of campaign finance prohibitions,
limitations, and regulation. That simply was not the case in 1996.''
10/22/97 Hrg., pp. 9-11.
\23\ 11 C.F.R. 102.12(c)(1).
\24\ Senate Judiciary Committee hearing, 4/30/97, p. 106.
\25\ Wall Street Journal , 10/17/97.
\26\ Exhibit 2336M: Transcript of ABC News Interview of Bob Dole,
6/6/96.
\27\ Donald Fowler deposition, 5/21/97, pp. 294-95. As described in
Chapter 26, this commitment led to the Vice President's making
fundraising calls to raise some of the soft money needed to fund the
media efforts.
\28\ Harold Ickes testified: ``Again, the discussions I had with
respect to my role in the White House as it related to both the DNC and
the Clinton campaign, was basically to use--sort of an overused
cliche--bottom line. I was looking at aggregates. And it was the DNC
and Clinton-Gore campaign that were dealing with the particular
specifics.'' Harold Ickes, 10/8/97 Hrg., p. 35.
\29\ Donald Fowler, 9/9/97 Hrg., pp. 76-77.
\30\ Harold Ickes, 10/7/97 Hrg., pp. 88-89.
\31\ Harold Ickes, 10/7/97 Hrg., pp. 86-90. See also Samuel Berger,
9/11/97 Hrg.
\32\ See Chapter 24. The testimony and documents submitted to this
Committee indicate that both the DNC and the White House took numerous
steps to ensure that government resources were not used for political
purposes. For example, there were separate fax machines, computers and
other office equipment that were used for political purposes. See
Jennifer O'Connor deposition, 10/6/97, pp. 149-50.
\33\ 10/22/97 Hrg., p. 10.
PART 5 FUNDRAISING AND POLITICAL ACTIVITIES OF THE NATIONAL PARTIES
AND ADMINISTRATIONS
Chapter 33: Coordination Between the Republican National Committee and
the Dole for President Campaign During the 1996 Cycle; Issue
Ads
Presidential campaigns that accept federal matching funds
must limit their spending to $37 million in hard money during
the primaries and $74 million in the general-election campaign.
As explained in the previous chapter, the Clinton campaign
legally coordinated with its political parties to spend
unlimited sums of money on issue ads designed to aid their
presidential candidates. These ads are legal as long as they do
not carry an electioneering message advocating the election or
defeat of a specific candidate. The law also permits political
parties and presidential campaigns to work together in
producing these issue ads.
The Dole for President campaign and the Republican National
Committee (``RNC'') also skirted the federal spending caps by
launching a multimillion-dollar issue-advocacy campaign that
was designed to support the Dole candidacy. Dole for President
controlled the RNC's media budget as well as the content and
production of the RNC's issue ads. Unlike the DNC's issue ads,
which all related to pending legislative issues, a number of
RNC ads did not discuss any substantive issues. Although these
Dole/RNC issue ads complied with the letter of the law, they
certainly violated the spirit of the law by permitting the Dole
campaign to benefit from RNC ads that are virtually
indistinguishable from the types of advertisements that a
presidential campaign would run. Dole for President also
circumvented federal spending limits by transferring to the RNC
payroll key Dole staffers who continued to work directly to
advance the Dole candidacy.
FINDINGS
(1) Both the Clinton campaign and the Dole for President
campaign benefited from spending by their respective parties in
excess of the spending limits applicable to presidential
candidates who accept public financing.
(2) Coordination of issue advocacy between the Clinton
campaign and the DNC and between the Dole for President
campaign and the RNC was legal under current campaign finance
laws.
(3) Both presidential campaigns coordinated fundraising to
pay for the issue advocacy of their respective parties.
INTRODUCTION
The RNC spent approximately $24 million over and above the
hard-money spending limit applicable to the Dole
campaign.1 This massive expenditure was for an
issue-advocacy campaign designed to inform voters about the
Republican view on issues. The evidence clearly shows that this
advertising effort was coordinated with the Dole campaign and
was designed to promote Dole's candidacy.
---------------------------------------------------------------------------
Footnotes at end of Chapter 33.
---------------------------------------------------------------------------
According to documents produced to the Committee, Scott
Reed, Dole's campaign manager, controlled the budget for this
ad campaign. Moreover, the RNC ads were produced by Don Sipple
and Tony Fabrizio, media consultants who were vendors to both
the Dole campaign and the RNC. Therefore, the content of these
ads, as well as the circumstances surrounding their creation,
production, and distribution show that the RNC designed its
issue- ad campaign for one purpose: to support the candidacy of
Senator Dole.
The DNC sponsored a similar effort during the 1996 election
cycle--the White House, the Clinton campaign, and the DNC
coordinated an extensive issue-advocacy effort that was
designed to support the re-election of the current
administration. (See Chapter 32.) There is nothing inherently
illegal about such efforts. However, the RNC advertisements
came closer to violating the legal test for issue advocacy than
did the DNC's ads. For example, a number of RNC issue ads did
not include any substantive discussion of legislative issues,
but simply discussed Senator Dole's biography or leveled
personal attacks against President Clinton. The DNC did not run
ads of that sort and has brought a lawsuit against the RNC and
the Dole campaign challenging several of the RNC issue ads.
The Dole campaign was able to make use of loopholes in the
campaign-finance law that essentially nullify the law's limits
on presidential campaign spending.
THE ORIGIN OF THE PRO-DOLE ISSUE-AD CAMPAIGN
In April 1995, Dole for President applied for federal
funding and pledged to spend no more than $37 million, limited
to hard money, before the August 1996 Republican Convention. By
March 1996, however, the Dole campaign had, by its own
estimate, only $2 million left to spend.2 In April,
Senator Dole conceded that his campaign was ``broke.''
3 In May--three months before the Republican
National Convention--the Dole campaign had only $177,000 left
to spend.4 As the New York Times explained, ``[n]o
presidential campaign [had] reported coming this close to the
spending limit this long before its convention.'' 5
As early as January 1996, the RNC had foreseen that its
nominee would emerge from the Republican primaries having
exhausted his financial resources, and it planned to support
the nominee's candidacy by running issue ads that would be paid
for with a hard-soft money mix that was not subject to the $37
million spending limit. The minutes of a January 17 RNC
Executive Council and Budget Committee meeting show that party
officials ``issued a request for [a] proposal to Republican
consultants to solicit ideas for how we can insulate our
nominee-to-be during the April-August interregnum.''
6 The party officials anticipated that ``[p]aid
advertising [would] be the necessary component of [the party's]
message management during this period, supplementing [its]
bracketing and press efforts.'' 7 On March 5, RNC
Chairman Haley Barbour wrote to Republican leaders:
Our nominee is likely (but not certain) to be known
by the end of March. Because of provisions of the
federal election law, our nominee is likely to be broke
and to have reached the spending limit allowed by law
(unless it is Steve Forbes who hasn't accepted federal
funds and, therefore, is under no limit). Assuming our
nominee has reached the limit, he will not be able to
air radio and TV spots or conduct much in the way of
campaign activity until the convention in August.\8\
Barbour went on to explain how the Republican Party planned to
aid its cash-strapped nominee: ``[T]he party (the RNC and our
state party organizations) are allowed to run issue and generic
party advertising, and we have a sizable (though it needs to be
bigger) budget for that. We are scheduled to begin in April.''
\9\ The chairman also made it clear that ``the party [could]
coordinate [its] generic advertising with anybody. . . .'' \10\
On May 16, Barbour announced that the RNC would launch a
$20 million advertising campaign. In the announcement, Barbour
boasted that the RNC's ads were designed to aid the Dole
campaign:
Yesterday, with Senator Dole's announcement that he
will resign from the Senate to be a full-time candidate
for president, the 1996 presidential campaign began in
earnest. Consistent with that, the Republican National
Committee is announcing today that we will launch a $20
million issue-advocacy advertising campaign between now
and our convention in August to get the issues of this
campaign before the American people and to get the
truth out about these issues.
* * * * *
Yesterday, Bob Dole picked up the flag of our Party
to carry it to victory in the November elections
against Bill Clinton. Now the Republican National
Committee will rally behind his leadership and use this
issue-advocacy campaign to show the differences between
Dole and Clinton and between Republicans and Democrats
on the issues facing our country, so we can engage
full-time in one of the most consequential elections in
our history.\11\
DOLE FOR PRESIDENT AND THE DOLE/RNC CAMPAIGN
The Dole for President committee exercised full control
over the budget for the RNC's issue-advocacy campaign as well
as the production and content of the RNC's ads, as a June 5
memo from Barbour to RNC Director of Campaign Operations Curt
Anderson and Anderson's assistant, Ruth Kistler, demonstrates.
Anderson and Kistler had suggested that the RNC spend $800,000
on ``Unity Events,'' which were RNC-sponsored campaign events
in which Senator Dole would appear. Barbour responded:
I will reach out to [Dole campaign manager] Scott
Reed to ask him to consider whether the Dole campaign
would want us to 1) reduce other spending, such as
issue advocacy television advertising, by $800,000; 2)
significantly increase the number and lead time for
Victory '96 events in order to offset these costs
(although I am not convinced at this time that the
Victory '96 events will produce the revenue currently
anticipated and budgeted for expenditure); 3) not spend
the sum requested for Unity Events; or 4) consider some
other alternative.\12\
This memorandum indicates that Dole's campaign manager
exercised control over not only the overall budget of the RNC's
issue-advocacy campaign, but also oversaw the RNC's Victory '96
project, a program run by long-time Dole aide Jo-Anne Coe and
used to fund the media campaign.
Dole for President also controlled the content of the RNC's
issue ads. The ads were created, written, and produced by Don
Sipple, Dole for President's media consultant, and Tony
Fabrizio, Dole's pollster. While Sipple produced these RNC ads,
he continued as Dole for President's media consultant. To plan
the issue-ad campaign, Sipple and Fabrizio met frequently--
usually on Wednesday evenings--with Haley Barbour, House
Speaker Newt Gingrich, Dole pollster Fred Steeper, RNC
Communications Director Ed Gillespie, and Dole Campaign Manager
Scott Reed.\13\ Although neither the RNC nor Dole for President
produced to the Committee any notes or agendas from these
meetings, the Committee does have an undated memo from Sipple
asking for Barbour and Reed to approve an issue ad Sipple had
proposed.\14\ The fact that Reed had the power to sign off on
ads and that the ads were created, written, and produced by
Dole operatives shows that Dole for President ran the RNC's
issue-advocacy campaign.
In a written submission to the Committee, Senator Dole
points out that he personally ``did not direct and control the
ads produced by the Republican National Committee. . . .'' \15\
Because the Committee did not depose a single witness about the
activities of Dole for President, the Minority is unable to
characterize Senator Dole's personal involvement in the RNC's
media campaign. Whatever Senator Dole's personal role was, it
is clear that his campaign manager, chief fundraiser, media
consultant, and pollster controlled the RNC's media campaign.
THE SUBSTANCE OF DOLE/RNC ISSUE ADS
In order to ensure that the Democratic National Committee's
advertisements were, in fact, issue ads, counsel for the DNC
and the Clinton campaign insisted that DNC ads ``had to relate
to a legislative issue that was pending before Congress, that
was actively in play and in discussion before Congress.'' \16\
The RNC and the Dole campaign did not have a similar policy,
and ran ads with no apparent link to legislative issues. These
ads praised Senator Dole and attacked President Clinton and
included virtually no discussion of public-policy issues.
The most notorious such Dole/RNC ad was entitled ``The
Story.'' This ad, which was produced by Don Sipple, used video
footage that had previously been used in ads made by Sipple for
the Dole campaign.\17\ It was run after Senator Dole had
resigned from the Senate. ``The Story'' merely recounted the
story of Bob Dole's life with no substantive discussion of
public-policy issues:
Senator Dole. We have a moral obligation to give our
children an America with the opportunity and values of
the nation we grew up in.
Voice Over. Bob Dole grew up in Russell, Kansas. From
his parents he learned the value of hard work, honesty
and responsibility. So when his country called . . . he
answered. He was seriously wounded in combat.
Paralyzed, he underwent nine operations.
Senator Dole. I went around looking for a miracle
that would make me whole again.
Voice Over. The doctors said he'd never walk again.
But after 39 months, he proved them wrong.
Mrs. Dole. He persevered, he never gave up. He fought
his way back from total paralysis.
Voice Over. Like many Americans, his life experience
and values serve as a strong moral compass. The
principle of work to replace welfare. The principle of
accountability to strengthen our criminal justice
system. The principle of discipline to end wasteful
Washington spending.
Senator Dole. It all comes down to values. What you
believe in. What you sacrifice for. And what you stand
for.\18\
Even RNC employees questioned whether ``The Story''
qualified as an issue ad. In a May 22, 1996, memo to Haley
Barbour, RNC Campaign Operations Director Curt Anderson
admitted, ``We could run into a real snag with the Dole Story
spot. Certainly, all the quantitative and qualitative research
strongly suggests that this spot needs to be run. Making this
spot pass the issue advocacy test may take some doing.'' \19\
Senator Dole himself admitted to ABC News that the RNC
``The Story'' ad was intended to boost his presidential
campaign and that viewers would regard ``The Story'' as a Dole
campaign ad:
Senator Dole. [W]e can, through the Republican
National Committee, through what we call the Victory
'96 program, run television ads and other advertising.
It's called generic. It's not Bob Dole for president.
In fact, there's an ad running now, hopefully in
Orlando, a 60-second spot about the Bob Dole story: Who
is Bob Dole? What's he all about? Pretty much the same
question that Ted Koppel asked me. So we'll do that. .
. . It never mentions the word that I'm--it never says
that I'm running for president, though I hope that it's
fairly obvious, since I'm the only one in the picture!
(Laughter).\20\
``The Story'' was not the only Dole/RNC issue ad that did
not include any substantive discussion of public-policy issues.
Don Sipple proposed to Haley Barbour and Scott Reed that ``we
do a spot on the constellation of ethics problems facing
Clinton and his administration. . . The purpose of doing this
ad would be to connect the dots for the American people--to
demonstrate a pattern of behavior.'' \21\ This ad does not meet
the requirement followed by the DNC that issue ads must relate
to a ``legislative issue that was pending before Congress, that
was actively in play and in discussion before Congress.'' \22\
Indeed, Sipple himself explained that ``this is a spot that
[Dole for President] shouldn't get to until late (if at all, in
advertising),'' \23\ indicating that this supposed RNC issue ad
was suitable for use by the Dole campaign.
The Dole/RNC issue ads were carefully worded to comply with
the letter of the law. As explained in Chapter 24, issue ads
are legal and do not count against a presidential campaign's
spending cap as long as they do not carry an electioneering
message advocating the election or defeat of a specific
candidate. Because the Dole/RNC ads did not tell viewers to
vote for Senator Dole, they did not violate any campaign-
finance laws. They were, however, indistinguishable from ads
that are typically run by a presidential campaign and were a
clear attempt to circumvent federal spending limits.
THE DOLE/RNC ``ISSUE ADS'' AND PRESIDENTIAL BATTLEGROUND STATES
One of the strongest indicators that the purpose of the
Dole/RNC issue ads was to support Senator Dole's candidacy is
that Dole for President and the RNC ran the ads only instates
where Clinton and Dole were close in the polls. In states where either
candidate had an insurmountable lead, the Dole campaign and the RNC did
not run issue ads. See Appendix.
Documentary evidence also supports the conclusion that the
criterion used by the RNC and the Dole campaign for deciding
where to run issue ads was whether the ads would help Senator
Dole win electoral votes. For example, Dave Hansen, an RNC
aide, argued that issue ads should be run in Washington state
because ``Washington is a very winnable state for Dole. Present
polls show him down to Clinton by 16 points which is about
where he is nationally. . . . For [Washington] to be left out
of the first major media program would be devastating to the
party and party faithful and, I believe would eliminate any
chance for Senator Dole to come back and win the state.''
24 Curt Anderson agreed with Hansen, arguing that
the omission of Seattle would ``cause us serious political
heartburn in the state of Washington, which is a state that we
could win Presidentially.'' 25 Anderson then
described the purpose of the RNC's media campaign:
The point that needs to be reiterated is that this
plan is based on the premise that right now we should
be targeting those markets that can not [sic] be
considered core partisan for either party. This assumes
that if, over the course of the summer, we raise the
water level of Dole support in the must win marginal
markets, the historically core Republican markets will
swing our way. Secondly, the targeted swing markets
represented are the most difficult must win voters.
This being the case, it makes sense to vie for these
votes now, in the hope that [Dole for President] can
close the deal in the fall. More to the point, playing
for the swing markets should keep them from moving to
core Clinton-Gore.26
The Dole/RNC issue ads were run to support the cash-
strapped Dole for President campaign. The ads were designed and
planned in content, timing, and location to assist the Dole
candidacy. Even Senator Dole admitted that the ads were
intended to aid his presidential bid. Because the law allows
such ads to be run by national parties with a mix of hard and
soft money that is not subject to federal spending limits, by
running these ads in coordination with the RNC, the Dole
campaign was able to bypass federal spending limits, while
remaining within the letter, if not the spirit, of the campaign
finance laws.
DOLE/RNC ISSUE ADS AND SOFT MONEY
Federal law requires that no more than 35 percent of the
money used to pay for party-building activities, such as
running issue ads, be soft money.27 Thus, while a
presidential campaign must raise and spend exclusively hard
money, a national party can support the campaign with
expenditures that are paid for in part with soft-money
contributions. Moreover, because the law in many states permits
parties to fund issue ads with more than 35 percent soft money,
by transferring money to the state parties, more soft money can
be used to pay for advertising. The RNC took advantage of this
loophole to run Dole/RNC issue ads that were funded primarily
with soft money.
The RNC started planning to transfer money for issue
advertising to state parties as early as March 18, 1996. On
that date, Curt Anderson wrote a memo to Haley Barbour entitled
``Ballot Allocation of Target States,'' which states that ``any
media we place in the target presidential states should be
placed through state parties. The average ballot allocation in
the top 17 target states is 37% federal--63% non-federal, this
obviously contrasts very well with our 65% federal--35% non-
federal allocation.'' 28 The memo also establishes
that state parties acted as mere conduits, exercising no
independent judgment over the ads:
Some have voiced concern that buying through the
state parties could result in a loss of control on our
part. There is absolutely no reason to be concerned
about this. As was demonstrated in our efforts recently
in the CA and OR special elections, our field staff is
fully able to insure that state parties make good on
any arrangement we make with them. This is simply a
book keeping hassle, but not in anyway [sic] a reason
not to proceed.29
On May 24, a week after the media campaign began, RNC
Finance Director Albert Mitchler wrote a memorandum stating
that the RNC needed ``to raise $2 million, minimum, in soft
money that has to be transferred to the CA State Party.''
30 Mitchler then stressed ``how critical it is that
this money be raised and assigned as quickly as possible so
that we can get on the air and stay on the air for the next
three months.'' 31
Unsigned RNC notes entitled ``Proposed media markets'' list
18 states in which Dole/RNC issue ads were to be run, and then
says:
--cash flow chart needed from Sipple
--can't buy week at a time
--thru state parties--as much as possible transfers
32
The author of this memo is not known to this Committee because
RNC employees refused to be deposed. However, the memo makes
clear that there was a coordinated plan to run ads that would
be paid for with as much soft money as possible. These ads
would be paid for with corporate contributions and other
contributions that exceeded the limits applicable to
presidential campaigns. By making use of this practice, a
presidential campaign, which is not permitted to accept soft
money in any amounts, may coordinate advertising efforts to
communicate its message and arrange to have the ads paid for
with up to 65 percent in soft-money contributions.
COORDINATION OF FUNDRAISING AND POLITICAL EFFORTS
The Dole campaign actively assisted the RNC in the party's
efforts to raise soft moneyto pay for the Dole/RNC issue-
advocacy campaign. Dole was personally involved in these fundraising
efforts. From May 28, 1996 through August 6, 1996 alone, at least 25
RNC soft-money fundraisers were held at which Dole made an
appearance.33 The coordination of fundraising efforts is
legally permissible--a candidate is permitted to raise money for his or
her party that will be spent to aid the candidate's campaign. See
Chapter 24.
Scott Reed, the campaign manager for Dole for President,
acknowledged that part of the Republican strategy in 1996
included fundraising to help defray the cost of issue ads that
would help Bob Dole. Reed said, ``We went out in April and May
and raised $25 million for the party, of which about $17, $18,
or $19 million was put into party building ads, which were Bob
Dole in nature.'' 34 Tony Fabrizio, a Dole pollster,
echoed Reed's statement: ``We were coming off a primary where
we were flat broke . . . We had a candidate who was very
sensitive to not having all of the money potentially available
to him post-convention. So to say that [fundraising] wasn't a
driving factor, especially since we put him out on the road to
raise $25 or $30 million for the party, would be unfair.''
35
Another way in which the Dole campaign and the RNC were
intermeshed involved staffing. In March and April 1996, the
Dole campaign reduced its staff from 230 to 67.36
Many of those who left the Dole payroll, including long-time
chief fundraiser Jo-Anne Coe, were hired by the RNC. Although
these individuals technically reported to the RNC, their job
duties continued to be to assist Senator Dole's campaign.
In a March 29, 1996, memo, Haley Barbour explained the
details of the shift of personnel from the Dole campaign to the
RNC payroll. He stated that the RNC had asked ``a number of
former DFP [Dole for President] employees and consultants'' to
work for the RNC's Surrogate Division and Campaign Operations
Division.37 The Surrogate Division, a part of
Victory '96, organized the travel of Dole and his wife to RNC-
sponsored campaign events, and Barbour designated Jo-Anne Coe
as the ``trigger person on travel requests'' for the
Doles.38 Nine other former Dole staffers were placed
in the RNC Surrogate Division to coordinate the Doles'
travel.39
As Senator Dole explained, the aim of Victory '96 was ``to
keep running honest, hard-hitting issue advertising,'' that is,
the Dole/RNC media campaign.40 In an April 18, 1996,
conference call with major Republican donors, Nancy Brinker, an
RNC fundraiser, admitted that the ``purpose of Victory '96 is
to elect Bob Dole as the next president of the United States.''
41 Barbour stated that the RNC assigned these former
Dole staffers to run all aspects of the Victory '96 program:
Update Victory '96 plans in light of our having a
presidential nominee; in states with GOP governors,
solicit and include the ideas and plans of the governor
and his political operation in the state plan; solicit
and include the ideas and plans of Republican senators
and governors in the state plan; hammer out the updated
Victory '96 plan by May 15; assist in raising the
revenue necessary and recruiting the leadership and
manpower necessary to implement the plan in the state.
. . .42
Thus, while on the RNC payroll, Dole staffers arranged
Senator Dole's travel and ran the program used to fund the
Dole/RNC media campaign. In his March 29, 1996, memo, Barbour
tried to camouflage the integration of the Dole and RNC staffs
by insisting that ``all former DFP staff who come to the RNC
must report in fact as well as on paper to the RNC. . . .''
43 The facts, however, are to the contrary.
Jo-Anne Coe, who had worked for Senator Dole for many
years, supervised the Dole staffers who joined the RNC payroll.
As Barbour indicated, former Dole staffers aided Coe in
arranging Dole's travel schedule--while the staffers and Coe
were supposedly working for the RNC. Coe also ran the Victory
'96 program. In fact, in an April 11, 1996, memo, Coe outlined
``a very aggressive plan to raise $14 million'' for Victory
'96.44 The plan called for fundraising appeals
``over the Bob Dole signature which worked so well for us in
the campaign.'' 45 It also relied on donations from
long-time Dole contributors, such as Phil
Anschutz.46
In the April 18, 1996, conference call with major
Republican donors mentioned above, the RNC's Brinker succinctly
characterized the relationship between the Dole campaign and
the RNC: ``The Dole for President campaign and the RNC have
been integrating our efforts for the past two weeks. All facets
of the transition have been smooth from fundraising and
political operations to communications.'' 47 Under
Coe's direction, former Dole staffers who were on the RNC
payroll ran every aspect of the bankrupt Dole for President
campaign, from planning campaign events for Dole to raising
money for a multimillion-dollar ad campaign designed to boost
the senator's candidacy.
Senator Dole and his longtime staffers were intimately
involved in planning and coordinating the RNC's efforts to
assist the Dole campaign and to raise the money for the RNC to
pay for the extra expenses. From the beginning, it was
understood that the RNC could, with Dole's assistance, raise
millions of dollars in soft money and spend it on political
activities, including advertising, that would advance the Dole
candidacy with money that was not subject to the hard-money
spending limits on the Dole campaign.
DOLE FOR PRESIDENT AND THE RNC IMPEDED THE COMMITTEE'S INVESTIGATION
There is strong documentary evidence that Dole for
President and the RNC worked together to find ways around the
federal spending limits for presidential candidates and the
hard-money requirements for parties. The Minority sought to
depose a number of individuals who had first-hand knowledge of
these activities, including:
Scott Reed, who managed the Dole campaign,
controlled the budget of the Dole/RNC issue-ad
campaign, and oversaw Victory '96; 48
Albert Mitchler, RNC finance director, who
was deeply involved in Victory '96 and the transferring
money from the RNC to state parties; 49
Curt Anderson, RNC director of campaign
operations, who helped plan the Dole/RNC media campaign
50 and who said that making ``The Story''
television ad ``pass the issue advocacy test may take
some doing;'' 51
Jo-Anne Coe, Dole's longtime chief
fundraiser and later the RNC deputy finance chairman,
who ran Victory '96 and supervised the Dole staffers
who joined the RNC payroll; 52
Don Sipple, media adviser to both the RNC
and Dole for President, who produced many of the Dole/
RNC issue ads; and
Tony Fabrizio, a Dole pollster who helped
create and produce the Dole/RNC issue ads.53
In August, the Minority asked Martin Weinstein, legal
counsel to the RNC, to schedule depositions for Reed, Mitchler,
Anderson and Coe. Weinstein assured the Committee that there
was no need to issue subpoenas because all of his clients would
appear for depositions voluntarily, as DNC witnesses had
done.54 In September, however, Weinstein told the
Committee that his clients would not agree to be deposed
without subpoenas. The Minority immediately requested the
issuance of subpoenas for Reed, Mitchler, Anderson, and Coe.
The Chairman refused to subpoena Mitchler and Anderson
55 but did agree to issue deposition subpoenas for
Reed and Coe. Reed and Coe chose to defy the Committee's
subpoenas. They asserted no legal justification for refusing to
comply with the Committee's lawful subpoenas; they simply
refused to be deposed.56
The Committee also issued a deposition subpoena to Tony
Fabrizio, who had helped prepare the Dole/RNC issue ads.
Fabrizio did appear for a deposition, but he refused to answer
any questions, including:
Did the RNC engage in any illegal or improper
activities during the 1996 federal election campaign?
Did the Dole campaign engage in any illegal or
improper activities during the 1996 federal election
campaign?
Were the polls you conducted for the RNC in 1996
designed to test the strength of Bob Dole's candidacy?
Did the Dole campaign design the polls you conducted
for the RNC in 1996?
In June and July of 1996, did the RNC run any ads
that were designed to boost the presidential candidacy
of Bob Dole? 57
Like Coe and Reed, Fabrizio offered no legal justification for
defying the Committee's deposition subpoena. Apparently, the
RNC had much to hide on these issues.
CONCLUSION
Dole for President and the RNC worked together closely,
coordinated their efforts, and implemented creative plans to
get around federal spending limits on presidential candidates
who accept public funds and federal hard-money requirements for
parties engaged in issue advocacy. The centerpiece of this plan
was a multimillion-dollar media campaign that was run by the
Dole for President committee, which wrote and produced the ads,
and which worked with the RNC to raise the necessary funds. The
media effort was funded primarily with RNC soft money
transferred to state parties. The campaign's purpose was to
promote the candidacy of Senator Dole. The Majority's refusal
to investigate these activities and the failure of Republican
witnesses to comply with deposition subpoenas are two more
examples of the failure of the Committee to conduct a
bipartisan investigation. The Republican Party was unwilling to
cooperate with the Committee's investigation and kept the
public from learning the truth about the activities of the Dole
for President campaign and the RNC.
footnotes
\1\ The DNC spent about $44 million on issue ads, while the RNC
spent about $24 million on issue ads. See FEC filings; see also, for
example, Annenberg Public Policy Center, ``Issue Advocacy Advertising
During the 1996 Campaign: A Catalog,'' Report Series No. 16, 9/16/97,
pp. 32, 53.
\2\ Exhibit 2323M: Washington Post, 5/4/96.
\3\ New York Times, 4/19/96.
\4\ New York Times, 5/18/96.
\5\ New York Times, 5/18/96.
\6\ RNC Executive Council and Budget Committee Meeting minutes, 1/
17/96.
\7\ RNC Executive Council and Budget Committee Meeting minutes, 1/
17/96.
\8\ Exhibit 2324M: Memorandum from Haley Barbour to Republican
Leaders, 3/5/96.
\9\ Exhibit 2324M: Memorandum from Haley Barbour to Republican
Leaders, 3/5/96.
\10\ Exhibit 2324M: Memorandum from Haley Barbour to Republican
Leaders, 3/5/96.
\11\ RNC News Release, R 044102, 5/16/96.
\12\ Memorandum from Haley Barbour to Curt Anderson and Ruthie
Kistler, R 001687, 6/5/96.
\13\ Washington Post, 5/26/96.
\14\ Memorandum from Don Sipple to Haley Barbour and Scott Reed, R
000445. The ad was ``a spot on the constellation of ethics problems
facing Clinton and his administration.''
\15\ Statement submitted for the record by Senator Bob Dole, 1/12/
98, p. 3.
\16\ Richard Morris deposition, 8/20/97, p. 142.
\17\ CNN Broadcast, 7/8/96 (text reprinted at http://
www.allpolitics.com /1996/news/9607/08/complaints.jackson/).
\18\ Transcript of ``The Story.'
\19\ Exhibit 2329M: Memorandum from Curt Anderson and Wes Anderson
to Haley Barbour, 5/22/96, R 044639-41.
\20\ Exhibit 2336M: Transcript ABC News Interview of Bob Dole, 6/6/
96.
\21\ Memorandum from Don Sipple to Haley Barbour and Scott Reed, R
000445 (emphasis added).
\22\ Richard Morris deposition, 8/20/97, p. 142.
\23\ Memorandum from Don Sipple to Haley Barbour and Scott Reed, R
000445.
\24\ Memorandum from Dave Hansen to Haley Barbour, 5/22/96, R
044642-43.
\25\ Exhibit 2329M: Memorandum from Curt Anderson and Wes Anderson
to Haley Barbour, 5/22/96, R 44639-41.
\26\ Exhibit 2329M: Memorandum from Curt Anderson and Wes Anderson
to Haley Barbour, 5/22/96, R 44639-41.
\27\ FEC Adv. Op. 1995-25.
\28\ Memorandum from Curt Anderson to Haley Barbour, 3/18/96, R
055196-97.
\29\ Memorandum from Curt Anderson to Haley Barbour, 3/18/96, R
055196-97.
\30\ Exhibit 2372M: Memorandum from Al Mitchler to Howard Leach et
al., 5/24/96, R 057192.
\31\ Exhibit 2372M: Memorandum from Al Mitchler to Howard Leach et
al., 5/24/96, R 057192 (emphasis in original).
\32\ Notes, R 044659.
\33\ Victory '96 Schedule of Events, R 1533-36, 1747-50, 2129-32.
\34\ Campaign for President '96, p. 117.
\35\ Campaign for President '96, p. 117.
\36\ Exhibit 2323M: Washington Post, 5/4/96.
\37\ Memorandum from Haley Barbour to Scott Reed, 5/29/96, R 17118-
21.
\38\ Memorandum from Haley Barbour to Scott Reed, 5/29/96, R 17118-
21.
\39\ Memorandum from Haley Barbour to Scott Reed, 5/29/96, R 17118-
21.
\40\ Memorandum from Senator Dole to Haley Barbour, 6/3/96, R 1135.
\41\ Notes of Team 100 Conference Call, Thursday, 4/18/96, R 49284-
87.
\42\ Memorandum from Haley Barbour to Scott Reed, 5/29/96, R 17118-
21.
\43\ Memorandum from Haley Barbour to Scott Reed, 5/29/96, R 17118-
21.
\44\ Memorandum from Jo-Anne Coe to Haley Barbour, 4/11/96, R 3828.
\45\ Memorandum from Jo-Anne Coe to Haley Barbour, 4/11/96, R 3828.
\46\ On April 18, 1996, one week after Ms. Coe drafted her Victory
'96 proposal, the Anschutz Corporation donated $250,000 to the
Republican National Committee. FEC Records.
\47\ Notes of Team 100 Conference Call, Thursday, 4/18/96, R 49284-
87.
\48\ Memorandum from Haley Barbour to Curt Anderson and Ruthie
Kistler, 6/5/96, R 001687.
\49\ Exhibit 2372M: Memorandum from Al Mitchler to Howard Leach et
al., 5/24/96, R 057192.
\50\ Exhibit 2329M: Memorandum from Curt Anderson and Wes Anderson
to Haley Barbour, 5/22/96, R 044639-41.
\51\ Exhibit 2329M: Memorandum from Curt Anderson and Wes Anderson
to Haley Barbour, 5/22/96, R 044639-41.
\52\ Memorandum from Jo-Anne Coe to Haley Barbour, 4/11/96, R 3828;
Memorandum from Haley Barbour to Scott Reed, 3/29/96, R 17118-21.
\53\ Memorandum from Don Sipple to Haley Barbour and Scott Reed,
cc: Tony Fabrizio, R 000445.
\54\ Letter from Martin Weinstein to Majority and Minority Chief
Counsels, 8/14/97.
\55\ Chairman Thompson purported to issue a subpoena for Curt
Anderson on September 19. The subpoena, however, asked Mr. Anderson to
appear for a deposition on September 17--two days before the subpoena
was served. The Minority asked for this error to be corrected, but it
was not.
\56\ Letter from Martin Weinstein to Majority Chief Counsel, 10/22/
97.
\57\ Tony Fabrizio deposition, 9/22/97, p. 10; Tony Fabrizio
deposition, 9/22/97, Exhibit 1: Questions Fabrizio refused to answer.
PART 6 ALLEGATIONS OF QUID PRO QUOS
Chapter 34: Overview and Legal Analysis
Allegations concerning ``quid pro quos,'' or favors
received from government officials in return for financial
contributions, go to the heart of public concern over campaign
finance. One of the most discouraging aspects of the present
campaign finance system is that even public policy decisions
undertaken in the utmost good-faith can take on an appearance
of impropriety in the context of a system where so many of the
individuals or entities likely to be affected by government
actions are able to make the kind of large campaign
contributions presently permitted by our system.
It is instructive to note at the outset what some federal
courts have stated as the underlying purpose of the bribery and
illegal gratuities law, that is, to prevent the sale of better
government services to those who can afford to pay for it:
All sections of the bribery statute are aimed at
preventing the evil of allowing citizens with money to
buy better public service than those without money . .
. ``[e]ven if corruption is not intended by either the
donor or the donee, there is still a tendency in such a
situation to provide conscious or unconscious
preferential treatment of the donor by the donee, or
the inefficient management of public affairs.'' United
States v. Biaggi, 853 F.2d 89, 101 (2d Cir. 1988),
cert. denied, 109 S.Ct. 1312 (1989).
LEGAL ANALYSIS
The primary consideration under federal criminal law would
be the federal bribery statute. That statute provides criminal
penalties for anyone who, directly or indirectly, corruptly
offers to a public official something of value, or promises to
give something of value to ``any other person or entity,'' with
the intent to ``influence any official act.'' 18 U.S.C.
Sec. 201(b)(1)(A). The statute also reaches the public official
who corruptly seeks or agrees to receive something of value for
himself or ``for any other person or entity'' in return for
being influenced in any official act. 18 U.S.C.
Sec. 201(b)(2)(A).
The bribery statute requires that the thing of value being
sought by the public official be ``in return for being
influenced'' in the performance of any official act. This is
part of the corrupt intent which is characteristic of a bribe.
This element of the offense, that the thing of value sought or
received is ``in return for being influenced'' in an official
act, requires that there be some express or implied quid pro
quo involved in the transaction. United States v. Arthur, 544
F.2d 730, 734-735 (4th Cir. 1976); United States v. Brewster,
506 F.2d 62, 72 (D.C. Cir. 1974). That is, the bribe must be
shown to be the ``prime mover or producer of the official act''
performed or promised to be performed. Brewster, 506 F.2d at
72, 82. So-called ``goodwill'' payments or general
contributions, which are given to create a favorable atmosphere
or feeling of gratitude in the recipient, or with the hope or
expectation of some possible future, undefined benefit, but
which are neither given nor received in the context of any
express or implied agreement to perform some identified
official act, that is, without a specific quid pro quo, are not
considered ``bribes'' under the statute. Arthur, 544 F.2d at
734, 735.
OVERVIEW OF FOLLOWING CHAPTERS
As the preceding legal discussion demonstrates, a finding
of an illegal quid pro quo requires much more than simply
pointing out that an individual or entity made a campaign
contribution some time before or after a government action was
taken which benefitted that individual or entity. Instead, the
Committee looked to the nature of the contacts between the
contributors and the decision makers, whether the contributions
were unique or singular in the history of the contributor at
issue, and whether the decision or action at issue seemed
unsupported by the facts. Unfortunately, many of the
allegations of illegal quid pro quos leveled against Democratic
contributors and fundraisers ignored these evidentiary issues
in favor of simplistic and cynical interpretations of
government decision making.
On the final day of the Committee's hearings, Interior
Secretary Babbitt, along with a former colleague who had
unsuccessfully lobbied Secretary Babbitt to approve an Indian
trust application for the purpose of building a casino near
Hudson, Wisconsin, were called to testify about allegations
that Interior's denial of the Hudson casino proposal was
undertaken in response to political pressure brought to bear by
opposing tribes who were also Democratic Party supporters.
Significantly, the original allegations of improper political
influence in this case were generated in the context of a
still-unresolved lawsuit brought by the gaming interests who
seek to run the casino in partnership with the Indians.
Although much of the hearing was devoted to the particulars of
a comment made to Eckstein at one point by Secretary Babbitt
which referenced Harold Ickes, the Committee largely ignored
the extensive evidentiary record it had created which found no
evidence that Babbitt had played any role in the decision or
that the Interior officials who did make the decision had any
knowledge of either campaign contributions by the opposing
tribes or alleged ``pressure'' from the White House or the DNC
to deny the casino proposal. These simple points, along with
the ample factual record that supported the merits of
Interior's decision, did not receive sufficient attention.
These same defenses were not available to Haley Barbour
with respect to his vigorous advocacy of tobacco interests
which donated millions of dollars to the Republicans during the
1996 election cycle. The Committee's investigation uncovered
detailed evidence of overtures Barbour made personally to
Republican elected officials on behalf of tobacco interests. It
is difficult to argue the merits of some of the pro-tobacco
positions urged by Barbour and apparently impossible to do so
with respect to the $50 billion tax credit granted to the
tobacco interests as part of the 1997 budget bill due, in part,
to Barbour's efforts. Barbour declined the Committee's
invitation to explain these actions and, perhaps as a result,
the Committee never found evidence that the contributions were
made with the intent of effecting such a huge giveaway.
Although the Committee's investigation did not uncover
illegality on Barbour's part, the relationship between the
Republican Party and monied tobacco interests is a prime
example of the kind of story that feeds public disillusionment
about our political system.
Allegations of a quid pro quo arrangement were also
levelled with respect to a $100,000 contribution made by the
Cheyenne-Arapaho Tribes (the ``Tribes'') to the DNC in 1996. At
the time the Tribes made their donation they were involved in a
lobbying campaign to reacquire certain tribal lands in Oklahoma
that had been taken by the Federal government. There was no
evidence presented to the Committee, however, that anyone
within the DNC or the Administration made any promises to the
Tribes concerning the return of their lands in exchange for
their contribution. Indeed, the President had supported
legislation which would have assisted the Tribes in asserting
their claim to the lands almost two years prior to the Tribes'
contribution. The Tribes had also succeeded in obtaining access
to officials in the appropriate federal agencies well before
their contribution. There has been no evidence presented to the
Committee that any official in a decision-making capacity with
respect to these lands was even aware of the Tribes'
contribution.
PART 6 ALLEGATIONS OF QUID PRO QUOS
Chapter 35: Secretary Babbitt and the Hudson Casino
On October 30, 1997, the Committee took testimony from
Secretary of the Interior Bruce Babbitt and Paul Eckstein, an
attorney-lobbyist from Phoenix, Arizona. Eckstein is a former
law school classmate and law partner of Secretary Babbitt's. At
issue was the July 14, 1995, decision by the Department of the
Interior (``Interior'') denying the request of three northern
Wisconsin Indian tribes that the United States take land in the
western Wisconsin city of Hudson ``into trust.'' The tribes
made this request to enable them and their partner, Galaxy
Gaming, Inc., to open a casino at a failing greyhound track
owned by Galaxy Gaming that was located on the proposed trust
site. Eckstein, hired as a lobbyist for the applicants, spoke
with Secretary Babbitt concerning the trust application on
several occasions between April and July 1995, including a
conversation with Babbitt on July 14, 1995--the day Interior
issued the decision denying the application. During that
conversation, according to Eckstein, Secretary Babbitt declined
to delay the issuance of the decision because Deputy White
House Chief of Staff Harold Ickes had instructed him to issue
the decision that day. During his testimony before the
Committee, Secretary Babbitt sought to explain apparent
contradictions between accounts he had given of this
conversation in two separate letters to Sen. McCain and
Chairman Thompson. On February 11, 1998, Attorney General Reno
petitioned for the appointment of an independent counsel to
investigate whether Secretary Babbitt ``committed a violation
of federal criminal law in connection with his sworn
testimony'' before this Committee.\1\
---------------------------------------------------------------------------
Footnotes at end of Chapter 35.
---------------------------------------------------------------------------
FINDINGS
(1) The evidence before the Committee supports the
conclusion that Secretary Babbitt did not act improperly with
respect to the Department of Interior's decision to deny the
Hudson trust application. The evidence shows that Secretary
Babbitt played no role in the Hudson trust decision, that he
did not hear from, or talk to, Harold Ickes about the decision,
and that the Interior officials who recommended denying the
trust application had no knowledge of either campaign
contributions by the opposing tribes or the alleged
``pressure'' from the White House or the DNC to deny the trust
application.
(2) However, Secretary Babbitt's actions with respect to
Eckstein, his letters to Senators McCain and Thompson, and his
testimony to this Committee regarding his conversations with
Eckstein were confusing. Secretary Babbitt's letter to Senator
McCain omitted the fact that Secretary Babbitt had invoked
Ickes' name to Eckstein even though that allegation was at the
center of Senator McCain's earlier letter to Secretary Babbitt.
The Secretary's subsequent letter to Senator Thompson
acknowledged that he did invoke Ickes' name with Eckstein, but
said that he did so only as a means to terminate his
conversation with Eckstein. Secretary Babbitt then testified to
this Committee that, even though he had not spoken to Ickes
about the trust application, he did not technically mislead
Eckstein when invoking Ickes' name because the White House
naturally wanted him to issue decisions in a timely way. These
statements, when taken together, are confusing, but they are
not directly inconsistent with the facts.
OVERVIEW
The St. Croix Meadows Greyhound Racing Track (``the dog
track'') is located in Hudson, Wisconsin, a small city near the
border of Wisconsin and Minnesota, approximately 25 miles east
of Minneapolis. Three northern Wisconsin Indian tribes, the Lac
Courte Oreilles Chippewa, the Red Cliffe Chippewa, and the
Sokaogon Chippewa, and their partner, Galaxy Casinos, Inc.,
formed the Four Feathers Casino Joint Venture (``Four
Feathers'') in early 1993 in order to open a gaming facility at
the dog track. The Lac Courte Oreilles Chippewa reservation,
located 85 miles from the greyhound racetrack, is the closest
of the three tribes' reservations to Hudson.
In November 1994, the partnership gained the recommendation
of the Minneapolis regional office of the Bureau of Indian
Affairs (``BIA'') that the Interior Department take the dog
track into trust on behalf of the three tribes and approve the
opening of a casino at the dog track. However, the Washington
headquarters of BIA, after performing further evaluation of the
proposal, recommended that this request be denied. Pursuant to
the recommendation of BIA's gaming staff, Deputy Assistant
Secretary for Indian Affairs Michael Anderson denied the
request in a letter dated July 14, 1995.
Four Feathers subsequently filed suit in U.S. District
Court in the Western District of Wisconsin, claiming that the
request that the dog track be taken into trust was denied by
Interior because of ``improper political pressure'' placed on
the department by White House Deputy Chief of Staff Harold
Ickes, DNC Chairman Donald Fowler, and others closely connected
to the national Democratic Party.
secretary babbitt's remarks to lobbyist eckstein
The primary evidence of supposed political ``interference''
in Interior's decision to deny the Hudson casino proposal are
remarks attributed to Secretary Babbitt by Eckstein during the
course of a last-ditch, unsuccessful appeal by Eckstein for
Interior to delay the issuance of its denial letter. Given the
issues that have been raised concerning the timing of some of
Eckstein's revelations and the consistency of Secretary
Babbitt's statements, the history of how these allegations came
to light merits close scrutiny.
Eckstein's affidavit
During the course of the litigation, the tribes filed a
motion to expand discovery beyond the administrative record
compiled by Interior, arguing that the evidence of improper
political pressure justified plaintiffs' request for discovery
into the reasons for Interior's decision. In support of that
motion, the tribes filed the affidavit of Paul Eckstein, a
lawyer-lobbyist hired by the tribes who recounted his
involvement in the Hudson casino matter in extensive detail.
Included in this affidavit was the allegation that Secretary
Babbitt told him on the day the application was rejected ``that
the decision could not be delayed because Presidential Deputy
Chief of Staff Harold Ickes had called the Secretary and told
him that the decision had to be issued that day.'' 2
Secretary Babbitt's letter to Senator McCain
Notwithstanding these allegations, the U.S. District Court
denied the applicants' request to take discovery outside the
administrative record. The Wall Street Journal published an
article on July 12, 1996, reporting on the contents of
Eckstein's affidavit concerning the Ickes comment and the
plaintiffs' allegations that the Interior Department denied the
Hudson casino application because of White House pressure.
After reading the Wall Street Journal article, Senator John
McCain, Chairman of the Indian Affairs Committee, wrote to
Secretary Babbitt to ask him about the veracity of the
allegations contained in the article.3 Specifically,
Senator McCain asked Secretary Babbitt whether it was true
``that you told Eckstein that Ickes had called you and told you
the decision in favor of Mr. O'Connor's client tribes had to be
issued that day without delay. ''4 Secretary
Babbitt, in a letter dated August 30, 1996, responded to that
specific inquiry as follows:
I must regretfully dispute Mr. Eckstein's assertion
that I told him that Mr. Ickes instructed me to issue a
decision on this matter without delay. I never
discussed the matter with Mr. Ickes; he never gave me
any instructions as to what this Department's decision
should be, nor when it should be made.5
Eckstein's deposition
In his deposition to this Committee on September 30, 1997,
Eckstein significantly expanded on his affidavit testimony
concerning his July 14 conversation with Secretary Babbitt.
Specifically, Eckstein alleged that at the end of their July
14, 1995, conversation, he objected to a letter that he had
seen from Patrick O'Connor, a lobbyist representing neighboring
tribes opposed to the Hudson casino, to Harold Ickes. This
letter requested assistance in receiving an unredacted copy of
an Arthur Andersen report commissioned by the tribal applicants
which found that the proposed casino would have no adverse
financial impact on the neighboring tribes with existing
casinos. In addition, the letter alleged, incorrectly, that the
greyhound race track on the proposed trust site was owned by a
Buffalo, NY company called Delaware North, which supposedly
enjoyed the support of Senator Alfonse D'Amato (R-
N.Y.).6 The letter also mentioned that the leader of
one of the applicant tribes was active in Republican party
politics and that the opposing tribes had been financial
supporters of the DNC and the 1992 Clinton-Gore
campaign.7 Eckstein recalled that he objected to the
contents of the letter, specifically the allegations concerning
Delaware North and the party affiliation of the chairman of the
lead applicant tribe.8 Although Secretary Babbitt
did not indicate to Eckstein that he had seen the O'Connor
letter, Eckstein claimed that at some point after he raised the
issue of the O'Connor letter, Secretary Babbitt asked him
rhetorically, ``Do you know how much . . . `these tribes' . . .
had contributed to either the Democratic party or Democratic
candidates or the DNC.'' Eckstein alleges that Secretary
Babbitt then answered his own rhetorical question by remarking,
``Well, it's on the order of half a million dollars, something
like that.'' 9
Secretary Babbitt's Letter to Chairman Thompson
On October 8, approximately one week after Eckstein's
deposition, Eckstein's confidential deposition testimony
concerning the remarks attributed to Secretary Babbitt were the
subject of news reports by the Minneapolis Star Tribune, the
Wisconsin State Journal and the NBC Nightly News.
In response to the request of the Committee that he submit
to a deposition, Secretary Babbitt wrote to Chairman Thompson
and explained that he would not appear for a deposition due to
press leaks of the Eckstein deposition but that he was willing
to testify voluntarily before the Committee. Secretary Babbitt
reiterated in this letter that Ickes never instructed him in
any way on the Hudson matter and offered the following
elaboration on his earlier statement to Senator McCain
concerning his conversation with Eckstein:
I do believe that Mr. Eckstein's recollection that I
said something to the effect that Mr. Ickes wanted a
decision is correct. Mr. Eckstein was extremely
persistent in our meeting, and I used this phrase
simply as a means of terminating the discussion and
getting him out the door. It was not the first time
that I have dealt with lobbyists by stating that the
Administration expects me to use my good judgment to
resolve controversial matters in a timely fashion, nor
do I expect it to be the last.10
Secretary Babbitt's Hearing Testimony
During his hearing testimony, Secretary Babbitt
consistently disputed two key elements of the ``Ickes comment''
attributed to him by Eckstein. First, Secretary Babbitt denied
ever making a reference to Ickes ``instructing'' or
``ordering'' him to do anything with respect to the Hudson
casino proposal. More substantively, Secretary Babbitt denied
ever speaking with ``Harold Ickes or anyone else at the White
House'' or with ``Donald Fowler or anyone else at the
Democratic National Committee'' concerning the Hudson casino
proposal.11 Instead, Secretary Babbitt allowed that
he may have made a reference to Ickes, who was the Department's
point of contact with the White House on many matters, as
``wanting'' or ``expecting'' prompt action on the Hudson casino
proposal. Secretary Babbitt explained that his general
references to Ickes' expectations was meant to convey to
Eckstein that ``this decision has got to be made. It is
overdue, and now is the time to make it.'' 12
Secretary Babbitt testified that he hoped the reference to
Ickes would allow him to end the discussion and ``express in a
way some sympathy toward his point of view.'' 13
Although Secretary Babbitt testified that he had had no
contacts with Ickes concerning the Hudson casino matter, he
disagreed with the suggestion that his general reference to
Ickes misled Eckstein, arguing that ``I think it's fair to say
that my superiors expect me to make decisions.'' 14
Second, Secretary Babbitt denied that he ever characterized
Ickes' generic expectations of Interior to include issuance of
a denial of the Hudson casino proposal on the day of his
conversation with Eckstein. The following colloquy between
Chairman Thompson and Secretary Babbitt captures the two
essential points of Secretary Babbitt's differences with
Eckstein:
Secretary Babbitt. [I]t is my recollection that I may well
have said to him, Mr. Ickes expects me to make a decision or
Mr. Ickes wants me to make a decision.
* * * * *
Chairman Thompson. Could you have said that Mr. Ickes
wanted you to make the decision that very day?
Secretary Babbitt. No, sir.
Chairman Thompson. You definitely remember you did not say
that?
Secretary Babbitt. I do, and I represented that much in my
letter to Senator McCain.15
Secretary Babbitt was definite in his recollection that,
although he might have generally suggested that Ickes
``wanted'' or ``expected'' a decision to be issued ``promptly''
or ``without delay,'' he would not have told Eckstein that
Ickes wanted a decision on that particular day. This is
unsurprising in light of Secretary Babbitt's testimony that he
never discussed the matter with Ickes, therefore making it
impossible for Ickes to suggest a particular date for the
decision. When Senator Collins reformulated Thompson's inquiry
to ask whether Secretary Babbitt's general reference to Ickes
might have been to the effect that Ickes had ``instructed''
Secretary Babbitt to promptly deny the trust application,
Secretary Babbitt again denied that he could have made any
reference to an ``instruction'' from Ickes.
Secretary Babbitt. I think my response to Senator McCain to
this question, were there--did you have communications with the
White House or Harold Ickes, and the response is I dispute any
assertion that there were such contacts or instructions because
there were not.
Senator Collins. I agree that your letter clearly says that
there was not contact for Mr. Ickes, but it also clearly says,
``I must regretfully dispute Mr. Eckstein's assertion that I
told him that Mr. Ickes instructed me to issue a decision in
this matter without delay.''
Secretary Babbitt. . . . I didn't tell Mr. Eckstein that.
Senator Collins. . . . What part isn't true? The ``without
delay'' part? Secretary Babbitt: I did not tell Mr. Eckstein
that Mr. Ickes had instructed me to make a
decision.16
Secretary Babbitt defended the accuracy of his response to
Senator McCain's inquiry about his conversation with Eckstein,
pointing out that Senator McCain's main concern was whether
Harold Ickes had given him instructions concerning the Hudson
casino matter. Secretary Babbitt responded to Senator McCain's
specific inquiry by stating that he had never told Eckstein
that Ickes had instructed him to issue a decision that day.
Secretary Babbitt's letter immediately goes on, however, to
specifically address the underlying issue of improper political
pressure from the White House on a pending policy matter. ``I
never discussed the matter with Mr. Ickes; he never gave me any
instructions as to what this Department's decision should be,
nor when it should be made.'' 17 Secretary Babbitt's
testimony confirms that his focus in responding to Senator
McCain's inquiry was the contention that the White House had
directed Interior to deny the Hudson casino proposal.
Part of the confusion surrounding Secretary Babbitt's
statements arises from the fact that, in his letter to
Thompson, he stated that he believed Eckstein's recollection to
be ``correct,'' whereas he had ``regretfully dispute[d]''
Eckstein's statements in his letter to Senator McCain.
Secretary Babbitt's letter to Thompson characterizes Eckstein's
recollection very broadly, however, as ``something to the
effect that Mr. Ickes wanted a decision.'' 18 The
substance of the statements contained in the two letters are
consistent. In the first letter to McCain, Secretary Babbitt
denied a specific allegation that he told Eckstein that Ickes
had instructed him to issue a decision that day. In the second
letter to Thompson, Secretary Babbitt confirms that Ickes did
not direct him to issue a decision but offers his recollection
of what was actually said by him with reference to Ickes. As
Secretary Babbitt testified, ``I believe those statements are
consistent. They both reflect my best recollection of what I
said and what I didn't say.'' 19 Nevertheless,
Secretary Babbitt might have avoided creating the initial
confusion if the more expansive account of his reference to
Ickes had been offered in response to Senator McCain's original
inquiry.
eckstein's allegations
Secretary Babbitt testified that he had no recollection of
any discussions with Eckstein concerning the O'Connor letter or
campaign contributions by the Indian tribes as alleged by
Eckstein.20 The first time Eckstein alleged on the
record that Secretary Babbitt had commented during their July
14, 1995, meeting about campaign contributions was in his
deposition before the Committee on September 20, 1997. This was
more than two years after Interior's denial of the Hudson
application. During that two-year period, Eckstein's client had
filed suit in federal court claiming that the denial decision
was politically influenced. To prove political influence,
Eckstein's client filed a motion for discovery, which motion
was supported in large part by an affidavit from Eckstein
describing his conversation in July 1995 with Secretary
Babbitt.21 Nowhere in that affidavit does Eckstein
mention the alleged comment by Secretary Babbitt about campaign
contributions.22 Nor did Eckstein seek to amend his
affidavit to include such allegations even when U.S. District
Judge Barbara Crabb denied the initial motion.
Senator Richard Durbin questioned Eckstein on this failure
to include the contributions statement in his affidavit and
underlined the difficulty faced by the Committee in reconciling
Eckstein's allegations with his affidavit.23
Here you are, the attorney for the losing Indian
tribes in this case. They are now going to court to try
to reverse the Department's decision. You have joined
in an effort to help them by signing a sworn affidavit,
and you leave out one of the most critical questions
and pieces of evidence that's being considered by this
Committee.'' 24
Eckstein testified in his deposition that he did not include
any reference to Secretary Babbitt's alleged comment about
campaign contributions by the tribes in his affidavit to the
court because ``I didn't want to put it in.'' 25
The Minority could find no credible evidence that Eckstein
ever told anyone off the record about Secretary Babbitt's
alleged campaign contributions comment prior to his deposition
before the Committee. Eckstein claimed that he told casino
publicist Mark Goff about the alleged comment immediately after
Eckstein's July 14 meeting with the Secretary.26 And
Eckstein claims he also may have told former Congressman Jim
Moody, another lobbyist for the tribes, as well as Fred
Havenick, the head of Galaxy Gaming.27 But despite
two years of comments by both sides about the case to the
press, the Minority could find no public comment by anyone,
including Goff, Moody and Havenick that ever mentioned the
alleged contributions comment by Secretary
Babbitt.28 In fact, when Eckstein's deposition was
leaked to the news media in October 1997, Goff was quoted as
stating, ``We consider this report to be the biggest piece of
news in two years.'' 29 During their investigation,
the Majority did not take the sworn testimony of Goff, Moody or
Havenick. And in an interview with Committee staff, George
Newago, the former chairman of one of the applicant tribes,
stated that he had never heard about Secretary Babbitt's
alleged comments concerning contributions prior to October
1997.30 These facts call into question Eckstein's
credibility on the other matters to which he testified. As
Senator Torricelli pointed out, these circumstances engender
considerable skepticism about the veracity of this part of
Eckstein's testimony:
[T]his Committee really is left with nothing other
than . . . Babbitt's failure to recollect it and a
recollection which seems to have come to you without
any contemporaneous affirmation for a considerable
period of time. . . . I think you'd have to concede to
me that [given the evidence] . . . you would at least
be very unclear about the state of the circumstances .
. .31
The Justice Department's preliminary investigation into these
allegations confirmed that ``Eckstein's allegations that
Secretary Babbitt commented about Indian contributions was
first made public in October, 1997, more than two years after
the conversation occurred.'' 32 Although Attorney
General Reno eventually petitioned for the appointment of an
independent counsel to investigate Secretary's Babbitt's
account of his reference to Harold Ickes, the Justice
Department's investigation ``developed no evidence that
Secretary Babbitt testified falsely when he stated that he does
not recall whether he commented that Indian tribes had
contributed approximately half a million dollars to the
Democratic National Committee or other entities.''
33 Attorney General also concluded that ``no further
investigation is warranted with respect to the perjury in
connection with Secretary Babbitt's stated failure to recall
his alleged comment about political contributions by Indian
tribes.'' 34
eckstein's interpretation
Even if Eckstein's allegations are fully credited, Eckstein
himself did not understand the comments he ascribed to
Secretary Babbitt to signify that the casino proposal had been
denied due to political pressure from the White House or the
DNC. Specifically, Eckstein testified that he did not
understand Secretary Babbitt's reference to Ickes's desire for
a prompt decision during their July 14, 1995, meeting to mean
that the White House had directed Interior as to the substance
of the Hudson decision.35 Instead, Eckstein
testified that his understanding of the comments he ascribed to
Secretary Babbitt was that the White House had, at the most,
pressured Interior as to the ``timing'' of the issuance of the
decision.36 Likewise, when pressed for his
understanding of the remarks concerning contributions by Indian
tribes which Eckstein ascribed to Secretary Babbitt, Eckstein
testified that he did not interpret the remark to suggest that
contributions by the tribes opposing the application had
determined the outcome of the agency's decision.37
secretary babbitt and lobbyists for the opposing tribes
O'Connor, one of the lobbyists for the opposing tribes, has
testified that, while he has met Secretary Babbitt on several
occasions and has spoken with him concerning other matters
during his tenure as secretary, they never spoke about the
Hudson casino.38 Secretary Babbitt corroborated this
recollection in his hearing testimony.39
Secretary Babbitt also testified that he does not recall
ever seeing the May 8, 1995, letter O'Connor sent to Harold
Ickes urging support for his clients' position until well after
the July 14, 1995, decision was rendered.40 John
Duffy also does not recall seeing the O'Connor letter prior to
commencement of the federal court litigation in Wisconsin in
the fall of 1995.41 Documents produced by Interior
confirm that they did not receive the letter until November 9,
1995, when an assistant U.S. attorney from the Western District
of Wisconsin faxed the letter to the Office of the Secretary,
following commencement of the litigation.42
O'Connor's sole contact with the Department of the Interior
occurred in March 1995, when he met with Secretary Babbitt's
chief of staff, Tom Collier, and John Duffy's special
assistant, Heather Sibbison. Sibbison, who did not recall
O'Connor's name, said she and Collier met with a lobbyist who
requested that Interior delay its decision until the opponents
of the Four Feathers project could submit an economic impact
study demonstrating the detrimental impact the Hudson casino
would have on their tribes.43 Collier recalled that
he was asked to attend the meeting at the last
minute.44 He also recalled that O'Connor's major
concern was that Interior delay the decision until after his
clients could submit their report,which would be by the end of
April 1995. Collier testified that--either when O'Connor was still in
the room, or directly after he left--Collier called the Indian Gaming
Management Staff office to ask about O'Connor's request. A staff member
said that the office would not reach its decision until after the end
of April, and thus the office did not object to keeping the record open
for additional public comment until that time.45
No career or political appointees from Interior recall any
further meetings or telephone conversations with O'Connor or
any of his lobbying partners concerning the Hudson casino
matter after the March 1995 meeting between Collier, Sibbison,
and O'Connor. The only request made by the tribes opposing the
casino proposal was that they be allowed to submit additional
comments concerning the detrimental impact the proposal would
have on their on-reservation casinos that employ hundreds of
Native Americans. Interior's accommodation of this request was
entirely appropriate and consistent with Departmental
procedures. In summary, Secretary Babbitt met personally only
with the supporters of the Hudson casino proposal and never met
once with the lobbyists hired by the casino's opponents.
ROLE OF THE WHITE HOUSE
Much has been made of the allegation that the White House
directed Interior to deny the Hudson application at the urging
of lobbyists for the tribes and the DNC. However, the Minority
found no evidence that White House personnel attempted to
influence the timing or substance of Interior's decision in
this matter. Instead, the only contacts between the White House
and Interior concerning the Hudson casino proposal were status
reports relayed from Interior staffers to junior White House
staffers.
Lobbyist contacts with Harold Ickes
O'Connor and his lobbying colleagues did make numerous
attempts to convince Ickes to get involved in advocating on
behalf of the opponents of the Hudson casino. First, Ickes and
O'Connor apparently exchanged several telephone messages on
April 25 and 26, 1995, but O'Connor testified that they never
actually spoke with one another during that
period.46 Ickes testified that, to his recollection,
he never met with O'Connor nor any representatives of the
tribes.47 Next, O'Connor, his Native American
colleague Larry Kitto, and several tribal leaders met with DNC
Chairman Fowler on April 28, 1995, and told him about their
concerns about the Hudson proposal.48 As a result,
Fowler said he talked to Ickes on the telephone about the
tribes' concerns and wrote Ickes a follow-up memo concerning
what these ``DNC supporters'' had emphasized in their
meeting.49
Patrick O'Connor followed up Fowler's efforts with his own
letter to Ickes, dated May 8, 1995, in which he unjustifiably
claimed that the Hudson casino proposal was a partisan wedge
issue in which Democrats opposed the proposal, and Republicans
favored it.50 In addition, one of O'Connor's
Washington-based law partners, Tom Schneider, mentioned
O'Connor's concerns regarding Hudson to Ickes at a DNC
fundraiser on May 14, 1995, and Schneider said Ickes told
Schneider, ``I'll follow through on it.'' 51
O'Connor's datebook entries corroborate that he was
unsuccessful in scheduling a White House meeting to present his
clients' concerns. Entries for May 15, 17, 19, and 24 indicate
that O'Connor's clients asked him about setting up a meeting
with Ickes on each of those dates.52 The datebook
reflects that, on the evening of May 24, O'Connor attended an
event for the Vice President at which he mentioned to Peter
Knight, a lobbyist and former campaign manager for then-Senator
Al Gore in 1992, and David Strauss, Vice President Gore's
deputy chief of staff, his problems with the Hudson
casino.53 On June 6, 1995, the datebook also
reflects that he mentioned to Clinton/Gore Finance Chair Terry
McAuliffe that he wanted to set up a meeting with
Ickes.54
The failure of O'Connor to arrange a meeting with Ickes is
not surprising, given the memo sent to Ickes by Loretta Avent
of the White House Office of Intergovernmental Affairs on April
24, 1995. In this memo, Avent, who handled relations with
Indian tribes for the White House, recounted that she had been
contacted that day by Bruce Lindsey concerning why she hadn't
returned a telephone call from Patrick O'Connor. In her memo to
Ickes, Avent emphasized that it was White House policy not to
communicate with lawyers or lobbyists for Indian tribes but
rather to deal directly with the tribal chairpersons as
governmental leaders. She emphasized that, because Indian
gaming is an area rife with controversy, it was best for the
White House to stay as far as possible from involvement with
the issue.55
White House requested status report from Interior
Shortly thereafter, Ickes asked Jennifer O'Connor, a staff
assistant, to find out the status of the Hudson casino
issue.56 Jennifer O'Connor wrote a memorandum to
Ickes on May 18, 1995, in which she reported that Interior was
in the process of making a decision and that the application
was likely to be denied. Ickes testified that it was his
responsibility to become aware of issues in a particular
inquiry and then make a decision about whether he should become
involved. When Ickes found out that Interior was handling the
matter, he testified that ``the best of my recollection is I
think that was the end of it as far as my office was
concerned.'' 57
Jennifer O'Connor testified that she contacted the office
of John Duffy and spoke with Heather Sibbison, Duffy's special
assistant; she has no recollection of speaking with anyone else
at Interior concerning the status of the Hudson
casino.58 Ms. O'Connor testified that, whenever she
made a status inquiry of an agency about a policy matter, she
would start ``with a disclaimer that roughly said, you know,
I'm looking for a status, I don't want you to tell me anything
I'm not supposed to know, I don't want to influence anything,
so just tell me what you can about this issue.'' 59
She recalled Sibbison's comments as follows:
And she sort of explained the context of it, that a
tribe wanted the Department of the Interior to approve
their ability to turn a dog track into a casino, and
that the community where the dog track was [located]
was pretty universally united against it and that they
were in the process of making a decision on it and
hearing from members of Congress and community leaders
and governors, and you name them, everybody seemed to
have an opinion on it; and that the department was not
yet done with its decision-making process, but she--it
was her personal opinion that based on all of the
negative information they were getting from communities
that they were most likely going to eventually deny it.
And I think she told me that none of this was public. I
think that's about the extent of the
conversation.60
Jennifer O'Connor wrote a May 18, 1995, memo to Ickes that
summarized the status of the Hudson casino issue at the
Interior Department. She verified in her deposition that the
information must have come about as a result of the
conversation she remembers having with Sibbison.61
In the memo, O'Connor states that the Interior staff had met on
the issue ``last night'' and had come up with a preliminary
decision to deny the application. According to this memo,
Interior's decision was likely to be based upon the following
factors:
the applicant tribes' existing reservations
were located far from the proposed casino site;
the local officials in Hudson and the local
(Republican) Congressman Gunderson opposed the project
based upon concerns that it would have an adverse
impact on the local community;
the Minnesota congressional delegation
opposed it because of the negative impact upon on-
reservation gaming facilities of tribes located near
Hudson in eastern Minnesota; and
``It is likely that a decision to approve
this proposal would result in a spotlight being shone
on the Indian Gaming Regulatory Act, which is under
some legislative pressure at the moment. The Department
wants to avoid this kind of negative attention to the
Act.''
The memorandum reflects that Interior staff were aware of the
possible influence of the ``bigger lobbyists'' of the wealthier
tribes influencing the process, but thought that such concerns
did not negate ``the uniform opposition from the local
community.'' The bottom line is a status report: ``the
Department is reviewing the comments received during the
comment period which ended April 30. It has committed to making
a final decision within a month.'' 62
White House requested second status report from Interior
A fax sent from Patrick O'Connor to Ickes's office on June
1, 1995, attached a newspaper article from a Madison,
Wisconsin, newspaper discussing another Wisconsin dog track
near Madison that was being purchased for conversion to an off-
reservation Indiancasino.63 In his fax cover sheet,
O'Connor made the point that allowing the Hudson casino to go forward
would be a bad precedent concerning off-reservation casinos, as was
indicated by the fact that other tribes were going forward with similar
proposals right in Wisconsin.64 Jennifer O'Connor did not
recall reading the article attached to this fax.65 She did
recall John Sutton, a staff person in Ickes's office, passing the fax
cover sheet to her and asking if she wanted to meet with Patrick
O'Connor.66 Ms. O'Connor testified that she never met with
Patrick O'Connor at any time.67 Ms. O'Connor subsequently
asked an intern in her office, David Meyers, to call Sibbison to find
out whether Interior had announced a decision concerning the
casino.68
Meyers contacted Sibbison and wrote a memo to Jennifer
O'Connor on June 6, 1995, recounting the conversation between
himself and Sibbison. He confirmed that Interior would make an
announcement concerning the Hudson matter in the next two weeks
and that the department was 95 percent certain that the
application would be turned down.
She [Sibbison] explained that there is significant
local opposition. Much of the opposition, however, is a
by-product of wealthier tribes lobbying against the
application. Therefore, they still want to receive
public comment in making a fair determination regarding
the application. . . . [S]he stated that they will
probably decline without offering much explanation,
because of their ``discretion'' in this matter. She
asked that if you have any feedback please call her
with your thoughts.69
Ms. O'Connor was confident that she never shared her thoughts
on the issue with Sibbison, stating, ``I had no need to because
they were about to make a decision, they were about to turn it
down. I had no reason to think there was anything wrong with
that.'' 70
White House and Interior confer on response to congressional inquiry
On June 26, 1997, Jennifer O'Connor faxed to Heather
Sibbison a copy of a June 12 letter from Minnesota's Democratic
congressional delegation to Ickes opposing the trust
acquisition, explaining the grounds for their opposition, and
asking him to explain their concerns to Secretary
Babbitt.71 The accompanying fax sheet contains, Ms.
O'Connor requests that Sibbison ``[p]lease have someone draft a
response.'' 72 On June 27, 1995, Sibbison faxed Ms.
O'Connor draft responses.73 The accompanying cover
memo from Sibbison to O'Connor explained that, in light of the
fact that the Department's decision to deny the trust
acquisition proposal might be made later that week, Sibbison
drafted two letters.74 The first draft could be sent
immediately acknowledging the concerns expressed by the
congressional delegation and advising them that the issue was
still under consideration.75 The other draft
contemplated that the decision denying the application had
already been released and simply advised the congressional
delegation of that fact.76 O'Connor's recollection
of her response, which is supported by a note she wrote on the
cover page of Sibbison's return fax, was that she decided to
send neither letter and simply asked Interior to respond on
behalf of the White House.77
In summary, when Jennifer O'Connor first contacted
Secretary Babbitt's office on behalf of Ickes, Heather Sibbison
told her that Interior was likely to deny the application, and
Ms. O'Connor's contemporaneous memo demonstrates that the
reasons for denial that Sibbison referred to were similar to
those actually used by Michael Anderson in his July 14, 1995
denial letter. Subsequent contacts between the White House and
Interior were routine and non-substantive. There is no evidence
that the White House influenced the substance of the decision.
Other Interior and White House contacts
Secretary Babbitt testified that he had no contact with any
White House staff, elected officials, or DNC personnel
concerning the Hudson casino proposal.78 Although
Secretary Babbitt mentioned Ickes to Eckstein during their July
14, 1995 meeting, Secretary Babbitt testified that Ickes was
the White House official who was the ``general point of
contact'' on Department of Interior matters, and thus Ickes was
a shorthand way for him to state that the White House expected
the Department to decide sensitive matters
promptly.79 Also, prior to the July 14, 1995,
decision in this matter, Secretary Babbitt testified that he
had no knowledge of any contact by his staff with White House
personnel concerning the Hudson casino.80 In
addition, Secretary Babbitt testified that no one told him
about the specific campaign contributions made by Indian tribes
to Democratic candidates or party organizations.81
John J. Duffy, Counselor to the Secretary, testified that
he had no recollection of having contact with Ickes or with
anyone in Ickes's office concerning the Hudson
matter.82 Duffy has no recollection of speaking with
Fowler or any DNC staff on the Hudson matter, nor did he ever
hear about any Interior employees speaking with Fowler or DNC
staff concerning this issue.83 Sibbison, the Special
Assistant to Secretary Babbitt, does not recall speaking with
Fowler or hearing about anyone speaking with the DNC or the
Clinton campaign about the Hudson issue.84
George Skibine, the director of the Indian Gaming
Management staff, stated that Heather Sibbison never told him
about inquiries she received from the White House on the
matter. Moreover, when Skibine was shown Ms. O'Connor's memo
concerning her conversation with Sibbison, Skibine agreed that
the opposition of Wisconsin officials based upon detriment to
the Hudson-area community and the opposition of the Minnesota
Democratic congressional delegation due to impact on nearby
tribes' on-reservation gaming facilities were integral reasons
for the denial of the application.85
Therefore, aside from the contacts between Sibbison and
either Jennifer O'Connor or White House intern David Meyers,
there is no evidence that Interior officials had any direct
contacts with Ickes or anyone else at the White House
concerning the Hudson casino proposal.
ECKSTEIN'S ACCESS TO INTERIOR OFFICIALS
According to the evidence collected by the Committee,
Eckstein, unlike Patrick O'Connor and other lobbyists hired by
the opposing tribes, was the only lobbyist who spoke
extensively to Secretary Babbitt, to John Duffy, the
secretary's counselor for Indian affairs, and to career Indian
Gaming Management Staff employees concerning the Hudson matter.
Eckstein's telephone contacts with Secretary Babbitt
Eckstein testified that he had one and perhaps two or three
telephone conversations with Secretary Babbitt of a substantive
nature after he was retained by the casino partnership in April
1995, and that he and Secretary Babbitt discussed the
grassroots opposition in the Hudson area, the opposition by
elected officials in Wisconsin and Minnesota, and the concerns
of nearby Indian tribes in Wisconsin and
Minnesota.86 Eckstein testified that he met with
Secretary Babbitt at the Interior Department, either around May
17 or shortly after Memorial Day, 1995. He stated that they met
for about a half-hour, after which time Secretary Babbitt gave
him a ride to his office, and they discussed many of the same
issues they had gone over in telephone
conversations.87
The tribal applicants' May 1995 meeting with Interior officials
Eckstein testified that Secretary Babbitt made it clear in
their telephone conversations that John Duffy was his counselor
in charge of monitoring Indian gaming issues. Eckstein
thereafter met on May 17, 1995, with Duffy and George Skibine,
the director of the Indian Gaming Management Staff. In addition
to Eckstein, Jim Moody, a former U.S. representative from
Wisconsin, attended on behalf of the partnership, as did Fred
Havenick, the owner of Galaxy Casinos, Inc., and
representatives of the three tribes involved in this casino
partnership.
According to Eckstein, Secretary Babbitt's office sent a
letter to Senator Tom Daschle on June 7, 1995, regarding Moody
and Havenick's continuing requests to meet with Secretary
Babbitt on this issue. The letter offers a revealing glimpse of
Interior's efforts to listen to the concerns of Eckstein's
clients and Eckstein's aggressiveness in seeking to lobby
Interior officials on behalf of his clients:
[T]he Department already has afforded Mr. Moody and
Mr. Havinick [sic] ample opportunity to express their
views. John [Duffy] personally met with Mr. Moody and
Mr. Havinick [sic] on this issue, and indeed, went out
of his way to accommodate them. On the morning of May
17, 1995, they arrived at the Department with no
scheduled meeting. John offered to carve out a fifteen-
minute block of time in an already over-booked morning
to see them, and arranged to have George Skibine,
Director of the Indian Gaming Management Staff, be
present. John allowed Mr. Moody and Mr. Havinick [sic]
to continue the meeting for a full forty-five minutes,
even though allowing this extension forced leaders from
another tribe, who had a scheduled appointment, to wait
half an hour beyond their meeting time.
After Mr. Moody and Mr. Havinick [sic] left John's
office, they continued the unscheduled meeting for
nearly two additional hours with George Skibine and his
staff. Additionally, as recently as last week, Mr.
Moody and Mr. Havinick [sic] met again with
George.88
Eckstein's July 14 meeting with Secretary Babbitt
Eckstein called Secretary Babbitt on July 11, 1995, to
request another opportunity to plead his clients' case since he
had heard rumors that the Department was about to make a
decision.89 Secretary Babbitt called Duffy to ask
him to meet with Eckstein again. In his deposition, Duffy
recalled, ``I said we are pretty far along and I think there
are very good reasons to get this out. And I think he
[Secretary Babbitt] said, ``Well, I would like you to make an
effort to meet with Paul and explain the decision to him and
hear what he has to say.'' And I think that is consistent with
the Secretary's desire to make sure that all sides are heard.''
90
Duffy then called Eckstein and they agreed to meet on the
morning of Friday, July 14.91 The draft decision was
finalized during that week.92 When Eckstein and
Moody presented their arguments to Duffy on the morning of July
14, Duffy said he felt that they simply repeated the arguments
that they had raised in the May 17 meeting.93 He
said he told them the decision would be issued denying the
application.94 Duffy explained the key reasons as
listed in the decision letter issued by Michael Anderson: (i)
the long distance of the applicant tribes from Hudson; (ii) the
opposition of the local community, as represented by the
statements of opposition of their local, state and federal
representatives; (iii) and the opposition of the nearby Indian
tribes with on-reservation casinos, specifically the St. Croix
Chippewa in Wisconsin.95
After Duffy informed Eckstein that the Department was
planning to deny the casino request, Eckstein contacted
Secretary Babbitt's office and requested an immediate, one-on-
one meeting with Secretary Babbitt.96 Secretary
Babbitt agreed to Eckstein's request and met with him later
that day for approximately a half-hour.97 During
that meeting, Secretary Babbitt did not grant Eckstein's
requests for additional delay in the issuance of the
Department's decision.98
THE MERITS OF INTERIOR'S DECISION ON THE HUDSON APPLICATION
Secretary Babbitt, John Duffy, Heather Sibbison, and
Michael Anderson all testified that the denial of the Hudson
application was consistent with a departmental policy that
casino projects not be approved if the applicant tribe's
current reservation is located far from the proposed site, the
host community is not supportive of the project, and the
project would have a detrimental impact on tribes whose
reservations were near the proposed site.99 George
Skibine, who wrote the draft letter denying the
application,100 testified that, with the exception
of Interior's reliance on the applicant tribes' distance from
Hudson, he was completely supportive of the reasoning and
language of the July 14, 1995, final decision
letter.101 Contrary to assertions in the October 30,
1997, hearing, George Skibine, the career civil servant charged
with recommending a decision agreed that the Hudson casino
application should be denied.102 The Minority's
formal request to depose Skibine before the Committee's October
30 hearing was declined by the Majority without explanation,
but it later took place, at the Minority's request, on November
17, 1997.103
The Hudson Casino would have been detrimental to the surrounding
community
As Secretary Babbitt emphasized in his testimony before the
Committee,104 the Indian Gaming Regulatory Act
105 requires that, when Indian tribes request that
Interior acquire land ``in trust'' on the Tribes' behalf for
gaming purposes, the Secretary must find that the new casino
would not be detrimental to the surrounding community,
following consultation with state and local officials,
including nearby Indian tribes. Even after the secretary makes
that determination, the land cannot be taken into trust until
``the Governor of the State in which the gaming activity is to
be conducted concurs in the Secretary's determination.''
106 The legal standard for taking off-reservation
land into trust for gaming purposes is much more rigorous than
when the land is within or contiguous to an existing
reservation.107
At the beginning of his tenure as Secretary of the
Interior, Secretary Babbitt made his position absolutely
clear.108 He favored on-reservation Indian casinos
without restrictions by host states but would endeavor to keep
Indian gaming on existing reservation lands unless an off-
reservation casino was clearly supported by the host
community.109 When the Mayor and the City Council of
Detroit publicly supported the ``Greektown'' casino proposed by
the Sault Ste. Marie Chippewa Tribe of Michigan, Secretary
Babbitt, after a staff determination that the casino would not
be detrimental to the Detroit community, sent a letter
requesting the concurrence of Michigan Governor John Engler to
the proposed land acquisition.110 Similarly, in
1997, both the Northwest Regional Office of the Bureau of
Indian Affairs (``BIA'') and the Washington-based Indian Gaming
Management Staff performed an extensive canvassing of opinions
in nearby towns and tribal governments before Interior
determined that an off-reservation casino proposed by the
Kalispal Indians near Spokane, Washington, would not be
detrimental to the surrounding community, and therefore
requested that Governor Gary Locke concur in this
determination.111
The surrounding communities opposed the Hudson Casino proposal
In stark contrast to the Michigan and Washington state
applications, extensive public comment by private citizens,
elected officials and leaders of Indian tribes located within a
50-mile radius of Hudson indicated that the proposed casino
would have caused social, economic, and environmental harm to
the surrounding communities. In early 1995, Interior received
complaints from Congressmen in both Wisconsin and Minnesota
that the Minneapolis regional office of the Bureau of Indian
Affairs had failed to consider adequately the detriment
thecasino would cause to the surrounding community.112 Even
in the June 8, 1995, memorandum of Tom Hartman,113 in which
the economic analyst on the Indian gaming management staff argued that
the Hudson casino proposal would not be detrimental to the surrounding
community, the author admitted the following important fact:
There has been no consultation with the State of
Wisconsin. . . . On January 2, 1995, the Minneapolis
Area Director was notified by the Acting Deputy
Commissioner for Indian Affairs that consultation with
the State must be done at the Area level prior to
submission of the Findings of Fact on the transaction.
As of this date, there is no indication that the Area
Director has complied with this directive for this
transaction.114
This failure to consult with the state was significant,
because consultation would have revealed that a large majority
of Wisconsin voters, including 65 percent in St. Croix County,
had voted ``Yes'' in a 1993 statewide referendum proposing a
state constitutional amendment to restrict the growth of casino
gambling in the state. In October 1994, while running for
reelection as Wisconsin's governor, Tommy Thompson promised
``I'm not in any way going to expand Indian gambling beyond
what it is today.'' 115 An aide to Thompson
confirmed that the governor's position meant that Thompson had
``shut the door on'' the Hudson casino proposal.116
Even after the election, when asked whether he supported the
expansion of gaming to raise funds for a new stadium for the
Milwaukee Brewers baseball team, Thompson stated the following:
``There is no expansion of Indian gaming. How many times do I
have to announce it?'' 117 In addition, the
Wisconsin State Senate's Republican Majority Leader, Michael
Ellis, had announced his opposition to the Hudson casino in
July 1994, as did the State Senate's Minority Democratic
Leader, Bob Jauch; Wisconsin's Democratic Attorney General,
James Doyle, wrote Secretary Babbitt in opposition in April
1995; and the Republican State Assemblywoman from Hudson,
Sheila Harsdorf, led a coalition of 29 Wisconsin Assembly
members who wrote to Secretary Babbitt and Thompson in March
1995 to express their joint opposition to the Hudson proposal
as detrimental to both the Hudson area and the entire state of
Wisconsin.118
In addition, the Congressman from the Hudson area,
Republican Steve Gunderson, forwarded to Interior evidence that
his constituents in the Hudson area widely opposed the casino.
For example, he sent a resolution in opposition passed on
December 12, 1994 by the Town of Troy which surrounds the St.
Croix Meadows Greyhound track on three sides; 119 a
resolution in opposition passed by the City of Hudson on
February 6, 1995; and a full-page advertisement signed by 25
Hudson-area business leaders opposing the casino because of
specific fiscal and social damage to the Hudson-area
community.120 Based upon the detrimental effects to
his district, and the dangerous national precedent of approving
an off-reservation casino over vigorous opposition of the local
community, Gunderson wrote to Secretary Babbitt on April 28,
1995 and urged the Department to deny the Hudson
application.121
Gunderson, who retired from the House of Representatives at
the end of the 104th Congress, expressed his recollection of
the Hudson casino issue in a letter to the Committee dated
October 19, 1997:
The Committee should be aware of significant and
intense opposition to any extension of gambling in
Wisconsin during this time. . . . I know of no
legislator in the area who endorsed the potential
casino--Republican or Democrat. . . . It is important
for the Committee to understand the depth of feeling in
opposition to the casino at that time. It is also my
impression that the opposition would be greater today.
The only merit in expanding the reservation for casino
purposes was to try and salvage something for the huge
investment in the dog track facility.122
Interior staff recommended denial
The Indian Gaming Management Staff (``IGMS'') also
identified numerous inadequacies in the environmental
assessment that had been prepared for the casino, particularly
concerning the St. Croix National Scenic Riverway located near
the greyhound track, raising another area of concern that the
casino would cause specific harm to the Hudson area community.
In January 1995, prior to George Skibine's assignment as
director of the IGMS, an IGMS staff member created an initial
``Findings of Fact'' document analyzing the Hudson casino
application. Referring to and attaching that document, IGMS
Environmental Protection Specialist Edward S. (``Ned'') Slagle,
a career civil servant, wrote Skibine a memorandum expressing
his views regarding supplementary materials received by IGMS
between January and May 1995, including the following:
The main additional environmental information which
was provided in the supplemental documents concerned
the St. Croix Scenic Riverway. The fact that the nearby
riverway has received a special designation was not
revealed in the environmental document which had been
submitted in connection with the other documents in
support of the proposed casino. The potential impact,
if any, of the proposed casino on the riverway was also
not adequately addressed. These deficiencies augment
the many others which were described earlier in the
environmental analysis sections of the Findings of
Fact.123
With regard to the other deficiencies, Slagle had
noted in the January 1995 document,
The environmental impacts of this proposed project
are analyzed insufficiently, and the plans for the
reduction and mitigation of adverse impacts are
insufficient. The Environmental Assessment (EA) of this
action is largely irrelevant because the existing
conditions are inadequately described. The EA is seven
years old, for a different proposed project, and for an
environment that has changed drastically during the
intervening years.124
In addition, in a letter to Skibine, four alderman, and the
mayor of Hudson, pointed to detrimental impacts to their
community's environment that would be caused by the large
increase in attendance at St. Croix Meadows accompanying a
casino. Among those documented detriments were ``harm to the
City's waste water treatment'' and ``problems with solid waste
due to the fact that the county's incineration facility is
permanently closed.'' 125 The National Parks and
Conservation Association also wrote a letter to Wisconsin
Governor Thompson and Secretary Babbitt expressing its concern
about the likely detriment to the St. Croix National Scenic
Riverway and the watershed surrounding that
waterway.126
With regard to these comments, Skibine testified, ``I
certainly agreed that the EA was deficient because the impact
on the St. Croix River Waterway was not addressed.''
127 Skibine testified that the environmental impact
of the project was a factor in his consideration of this
application.128 Thus, based upon Slagle's written
comments on the Hudson application, it is inaccurate to state
that the Indian Gaming Management Staff supported this
application.
The Administrative Record
Skibine testified that in June 1995 he read the entire
record on the Hudson casino proposal, including the staff memos
written by Hartman and Slagle, and discussed the matter with
other staff members such as Paula Hart, Leroy Chase, and Larry
Scrivner.129 Following this review, Skibine drafted
a letter denying the application based upon the secretary's
discretionary authority under Section 5 of the Indian
Reorganization Act of 1934 (``IRA'').130 The letter
based this rejection primarily upon the specific opposition of
the neighboring communities of Hudson and Troy, Wisconsin,
which were based upon (1) increased law enforcement expenses
due to potential exponential growth in crime and traffic
congestion; (2) testing [sic] waste water treatment facilities
up to remaining operational capacity; (3) problems with solid
waste; (4) adverse effect on the communities'' future
residential, industrial and commercial development plans; and
(5) difficulties for current Hudson businesses to find and
retain employees.'' Skibine's letter referred to the objections
of both Wisconsin's St. Croix Chippewa and Minnesota's Shakopee
Mdewakanton Sioux as neighboring Indian tribes with concerns
about the ``potential harmful effects of this acquisition on
their gaming establishments.'' Skibine also referred to the
objections of a number of elected officials, including the
state and United States representatives from the Hudson area.
Finally, the location of the proposed casino within a half-mile
from the St. Croix National Scenic Riverway was noted as a
potentially harmful impact in this letter. Skibine testified
that this letter was based upon the record compiled in the
case, and there were no other matters that he could think of
that were important in his decision-making
process.131
Allegations of Timing and Political Pressure
An e-mail from Skibine to the Indian Gaming Management
Staff dated July 8, 1995, reveals that Skibine edited the
Hudson letter, ``per Duffy and Heather's instructions,'' and
that he wanted it brought up to Heather Sibbison first thing
Monday morning (July 10, 1995). According to the e-mail, this
was because ``[t]he Secretary wants this to go out ASAP because
of Ada's impending visit to the Great Lakes Area.''
132 Ada Deer, the Assistant Secretary forIndian
Affairs, was scheduled to visit Wisconsin later in July. A note in
Interior's files from Sibbison to Tona LaRocque of the Indian Gaming
Management Staff, dated July 10, 1995, stated, ``Please let me know as
soon as the letters are signed. They should be faxed out to the Tribes,
so that they will have some time to digest the information before Ada
arrives later in the week.'' 133 Skibine verified that he
and Deputy Assistant Secretary for Indian Affairs Michael Anderson
discussed the revised decision letter together on either July 10 or
July 11, while they were out of town on other business, and that
Anderson wanted some changes made to the letter.134
While Anderson did testify that he was asked by Deer's
special assistant, Michael Chapman, to sign the letter by July
14, he stated that this request likely was made because he was
going to be out of the office until July 24, and the matter was
clearly ripe for decision.135 As indicated by the
internal memoranda of the Department of Interior dated July 8
and July 10, 1995 as well as Eckstein's own testimony that he
had heard ``rumors that the application was going to be
denied,'' it clearly was in the best interests of the
department that the decision be issued prior to a visit to a
Wisconsin ``pow-wow'' by Deer on July 15 and 16, 1995, so that
she would not be bombarded with further lobbying efforts and
inter-tribal arguments on the matter.
Interior's Final Decision-Maker Acted on the Merits
Anderson, who had the final decision authority, also
testified about the absence of political considerations from
his decision-making process.136 Anderson said that
he had reviewed the relevant legal standards and the analyses
of the staff (which he described as the ``driving force''
behind the decision), and he felt that he had a ``competent
understanding of what the facts were.'' 137
Anderson's decision, however, was not influenced by any
conversations with Secretary Babbitt concerning this matter.
Anderson testified that, prior to making the decision denying
the Hudson casino proposal, he had never discussed the matter
with Secretary Babbitt and, indeed, had ``never heard the
Secretary's position stated at all on this matter.''
138 This was confirmed by Secretary Babbitt himself,
who testified that he ``did not personally make the decision to
deny the Hudson application, nor did I participate in
Department deliberations relating to that application.''
139 Moreover, Anderson testified that he was not
aware of the status reports that had been requested from
Interior by Ickes's assistant.140 Likewise, Anderson
said that he had no knowledge, direct or indirect, of any
contacts between the DNC and Interior.141
CONCLUSION
It is clear from the evidence in the record, including the
testimony taken by this Committee, that the decision by the
Department of the Interior to deny the Hudson casino
application was based upon legitimate concerns about detriment
to the communities surrounding the Hudson greyhound track and
to neighboring Indian communities with pre-existing, on-
reservation casinos. The bipartisan opposition from federal,
state, and local elected officials demonstrates that approval
of the Hudson casino project would have been contrary to the
best interests of the surrounding communities. Allegations that
the White House and the DNC caused the Interior Department to
deny this application are unsupported by the evidence before
this Committee.
footnotes
\1\ Application To The Court Pursuant to 28 U.S.C. Sec. 592(c)(1)
For The Appointment Of An Independent Counsel, (D.C. Cir. Feb. 11,
1998), p. 1.
\2\ Exhibit 1588: Affidavit of Paul Eckstein.
\3\ Exhibit 1578: Letter from Senator McCain to Secretary Babbitt
re: Wall Street Journal article, 7/19/96; Exhibit 1582: Letter from
Senator McCain to Harold Ickes re: Wall Street Journal article, 7/19/96
[EOP 64386]; Exhibit 1584: Letter from Senator McCain to President
Clinton re: Wall Street Journal article, 7/19/96, [EOP 64390].
\4\ Exhibit 1578: Letter from Senator McCain to Secretary Babbitt
re: Wall Street Journal article, 7/19/96.
\5\ Exhibit 1580: Letter from Secretary Babbitt to Senator McCain
re: Wall Street Journal article, 8/30/96.
\6\ Exhibit 1560: Letter from Patrick O'Connor to Harold Ickes re:
Hudson casino proposal, 5/8/95. [EOP 64262-3]
\7\ Exhibit 1560: Letter from Patrick O'Connor to Harold Ickes re:
Hudson casino proposal, 5/8/95. [EOP 64262-3]
\8\ Paul Eckstein deposition, 9/30/97, pp. 59-60.
\9\ Paul Eckstein deposition, 9/30/97, p. 53.
\10\ Exhibit 1587: Letter from Secretary Babbitt to Chairman
Thompson, 10/10/97.
\11\ Secretary Babbitt, 10/30/97 Hrg., pp. 116-117.
\12\ Secretary Babbitt, 10/30/97 Hrg., p. 185.
\13\ Secretary Babbitt, 10/30/97 Hrg., p. 137.
\14\ Secretary Babbitt, 10/30/97 Hrg., p. 138.
\15\ Secretary Babbitt, 10/30/97 Hrg., pp. 126-127.
\16\ Secretary Babbitt, 10/30/97 Hrg., pp. 187-188.
\17\ Exhibit 1580: Letter from Secretary Babbitt to Senator McCain
re: Wall Street Journal article, 8/30/96.
\18\ Exhibit 1587: Letter from Secretary Babbitt to Chairman
Thompson, 10/10/97.
\19\ Secretary Babbitt, 10/30/97 Hrg., p. 136.
\20\ Secretary Babbitt, 10/30/97 Hrg., p. 130.
\21\ Exhibit 1588: Affidavit of Paul F. Eckstein.
\22\ Exhibit 1588: Affidavit of Paul F. Eckstein.
\23\ Paul Eckstein, 10/30/97 Hrg., pp. 93-96.
\24\ Senator Durbin, 10/30/97 Hrg., pp. 91-92.
\25\ Paul Eckstein deposition, 9/30/97, p. 63.
\26\ Paul Eckstein deposition, 9/30/97, p. 105; Paul Eckstein, 10/
30/97 Hrg., p. 65.
\27\ Paul Eckstein deposition, 9/30/97, p. 105; Paul Eckstein, 10/
30/97 Hrg., p. 65.
\28\ Wall Street Journal, 7/12/96; Wisconsin State Journal, 7/28/
96; Wisconsin State Journal, 4/1/97; Wisconsin State Journal, 8/16/97.
\29\ Wisconsin State Journal , 10/8/97.
\30\ Staff interview with George Newago, 10/29/97.
\31\ Senator Torricelli, 10/30/97 Hrg., pp. 102-103.
\32\ Application To The Court Pursuant to 28 U.S.C. Sec. 592(c)(1)
For The Appointment Of An Independent Counsel, (D.C. Cir. Feb. 11,
1998), p. 7.
\33\ Application To The Court Pursuant to 28 U.S.C. Sec. 592(c)(1)
For The Appointment Of An Independent Counsel, (D.C. Cir. Feb. 11,
1998), p. 7.
\34\ Application To The Court Pursuant to 28 U.S.C. Sec. 592(c)(1)
For The Appointment Of An Independent Counsel, (D.C. Cir. Feb. 11,
1998), pp. 7-8.
\35\ Paul Eckstein deposition, 9/30/97, p. 90.
\36\ Paul Eckstein deposition, 9/30/97, p. 90.
\37\ Paul Eckstein deposition, 9/30/97, p. 115.
\38\ Exhibit 2512M: Patrick O'Connor deposition in Four Feathers
Casino Joint Venture Partnership v. City of Hudson, Case No. 95-CV-540,
St. Croix County., WI Circuit Court, 4/18/97, pp. 107-108.
\39\ Secretary Babbitt, 10/30/97 Hrg., p. 150-151.
\40\ Secretary Babbitt, 10/30/97 Hrg., p. 150.
\41\ John Duffy deposition, 9/29/97, pp. 79-80.
\42\ Exhibit 2515M: Letter from Sue Ellen Sloca, Office of the
Secretary of the Interior, FOIA officer, to Glenn R. Simpson and Jill
Abramson, Wall Street Journal, 4/25/97.
\43\ Heather Sibbison deposition, 9/26/97, pp. 50.
\44\ Tom Collier deposition, 9/29/97, pp. 11-12.
\45\ Tom Collier deposition, 9/29/97, pp. 11-13.
\46\ Exhibit 2512M: Patrick O'Connor deposition in Four Feathers
Casino Joint Venture Partnership v. City of Hudson, Case No. 95-CV-540,
St. Croix County., WI Circuit Court, 4/18/97, pp. 107-108.
\47\ Harold Ickes deposition, 9/22/97, p. 34.
\48\ Exhibit 1559: Memorandum from Don Fowler to Harold Ickes re:
Indian Gaming Issue, 5/5/95. [DNC 3245524].
\49\ Exhibit 1559: Memorandum from Don Fowler to Harold Ickes re:
Indian Gaming Issue, 5/5/95. [DNC 3245524]
\50\ Exhibit 1560: Letter from Patrick O'Connor to Harold Ickes re:
Hudson casino proposal, 5/8/95. [EOP 64262-3]
\51\ Chairman Thompson, 10/30/97 Hrg., p. 7, referencing Exhibit
1592: Tom Schneider deposition, 9/9/97, taken in Four Feathers Casino
Joint Venture Partnership v. City of Hudson, Case No. 95-CV-540, St.
Croix County, WI Circuit Court.
\52\ Exhibit 1557: Entries from Patrick O'Connor's datebook. [OC 4,
31, 49, 62, 68, 69, 73, 74, 76-81, 83-89 & 93]
\53\ Exhibit 1557: Entries from Patrick O'Connor's datebook. [OC
80].
\54\ Exhibit 1557: Entries from Patrick O'Connor's datebook. [OC
83].
\55\ Exhibit 1597: Memo from Loretta Avent to Harold Ickes re: call
from Bruce Lindsey concerning O'Connor, 4/24/95. [EOP 069071]
\56\ Jennifer O'Connor deposition, 10/6/97, pp. 37-38.
\57\ Harold Ickes deposition, 9/22/97, pp. 35-36, 38-39.
\58\ Jennifer O'Connor deposition, 10/6/97, pp. 39-40.
\59\ Jennifer O'Connor deposition, 10/6/97, p. 40.
\60\ Jennifer O'Connor deposition, 10/6/97, pp. 40-41.
\61\ Jennifer O'Connor deposition, 10/6/97, p. 57, referencing
Exhibit 1562: Memo from Jennifer O'Connor to Harold Ickes re: ``Indian
Gaming in Wisconsin,'' 5/18/95. [EOP 64394]
\62\ Exhibit 1562: Memo from Jennifer O'Connor to Harold Ickes re:
``Indian Gaming in Wisconsin,'' 5/18/95. [EOP 64394]
\63\ Exhibit 1566: Fax from Patrick O'Connor to Harold Ickes/John
Sutton, 6/1/95. [EOP 64251].
\64\ Exhibit 1566: Fax from Patrick O'Connor to Harold Ickes/John
Sutton, 6/1/95. [EOP 64251].
\65\ Jennifer O'Connor deposition, 10/6/97, pp. 66-67.
\66\ Jennifer O'Connor deposition, 10/6/97, p. 67.
\67\ Jennifer O'Connor deposition, 10/6/97, p. 66.
\68\ Jennifer O'Connor deposition, 10/6/97, p. 53.
\69\ Exhibit 1599: Memo from David Meyers, White House intern, to
Jennifer O'Connor, special assistant to Harold Ickes re: ``Wisconsin
Dog Track,'' 6/6/95. [EOP 64250]
\70\ Jennifer O'Connor deposition, 10/6/97, p. 56.
\71\ Exhibit 1569: Fax from Jennifer O'Connor, aide to Harold
Ickes, to Heather Sibbison, special assistant to Interior counselor
John Duffy, asking for a draft response to an enclosed 6/12/95 letter
from Minnesota's Democratic congressional delegation expressing
opposition to the Hudson casino plan, 6/26/95. [02893, EOP 064257-8].
\72\ Exhibit 1569: Fax from Jennifer O'Connor, aide to Harold
Ickes, to Heather Sibbison, special assistant to Interior counselor
John Duffy, asking for a draft response to an enclosed 6/12/95 letter
from Minnesota's Democratic congressional delegation expressing
opposition to the Hudson casino plan, 6/26/95. [02893, EOP 064257-8].
\73\ Exhibit 1570: Fax from Heather Sibbison, special assistant to
Interior counselor John Duffy, to Jennifer O'Connor, aide to Harold
Ickes, enclosing draft responses to a 6/12/95 letter from Minnesota's
Democratic congressional delegation expressing opposition to the Hudson
casino plan, 6/27/95. [EOP 64253-6].
\74\ Exhibit 1570: Fax from Heather Sibbison, special assistant to
Interior counselor John Duffy, to Jennifer O'Connor, aide to Harold
Ickes, enclosing draft responses to a 6/12/95 letter from Minnesota's
Democratic congressional delegation expressing opposition to the Hudson
casino plan, 6/27/95. [EOP 64253-6].
\75\ Exhibit 1570: Fax from Heather Sibbison, special assistant to
Interior counselor John Duffy, to Jennifer O'Connor, aide to Harold
Ickes, enclosing draft responses to a 6/12/95 letter from Minnesota's
Democratic congressional delegation expressing opposition to the Hudson
casino plan, 6/27/95. [EOP 64253-6].
\76\ Exhibit 1570: Fax from Heather Sibbison, special assistant to
Interior counselor John Duffy, to Jennifer O'Connor, aide to Harold
Ickes, enclosing draft responses to a 6/12/95 letter from Minnesota's
Democratic congressional delegation expressing opposition to the Hudson
casino plan, 6/27/95. [EOP 64253-6].
\77\ Jennifer O'Connor deposition, 10/6/97, pp. 49-51, referencing
Exhibit 1570, Fax from Heather Sibbison, special assistant to Interior
counselor John Duffy, to Jennifer O'Connor, aide to Harold Ickes,
enclosing draft responses to a 6/12/95 letter from Minnesota's
Democratic congressional delegation expressing opposition to the Hudson
casino plan, 6/27/95. [EOP 64253-6]
\78\ Secretary Babbitt, 10/30/97 Hrg., p. 147-148.
\79\ Secretary Babbitt, 10/30/97 Hrg., p. 121.
\80\ Secretary Babbitt, 10/30/97 Hrg., p. 119-120.
\81\ Secretary Babbitt, 10/30/97 Hrg., p. 121.
\82\ Exhibit 2510M: John Duffy deposition, 9/29/97, p. 57.
\83\ John Duffy deposition, 9/29/97, pp. 68-71.
\84\ Heather Sibbison deposition, 9/26/97, pp. 42 & 44.
\85\ George Skibine deposition, 11/17/97, p. 48-50.
\86\ Paul Eckstein deposition, 9/30/97, pp. 22-25.
\87\ Paul Eckstein deposition, 9/30/97, p. 26-28.
\88\ George Skibine deposition, 11/17/97, pp. 54-55.
\89\ Paul Eckstein deposition, 9/30/97, p. 43.
\90\ John Duffy deposition, 9/29/97, p. 107.
\91\ Paul Eckstein deposition, 9/30/97, p. 44-45.
\92\ John Duffy deposition, 9/29/97, pp. 107.
\93\ John Duffy deposition, 9/29/97, p. 107.
\94\ John Duffy deposition, 9/29/97, p. 105-107.
\95\ John Duffy deposition, 9/29/95, p. 104-105.
\96\ Paul Eckstein deposition, 9/30/97, p. 51.
\97\ Paul Eckstein deposition, 9/30/97, p. 52.
\98\ Paul Eckstein deposition, 9/30/97, p. 53.
\99\ Secretary Babbitt, 10/30/97 Hrg., pp. 120-122; John Duffy
deposition, 9/29/96, pp. 23-25; Heather Sibbison deposition, 9/26/95,
pp. 24-26; Michael Anderson deposition, 9/19/96, pp. 18- 20, 43-45.
\100\ Exhibit 2508M: Draft letter from Interior Assistant Secretary
for Indian Affairs Ada Deer to tribal leaders denying the Hudson casino
request, 6/29/95. [3211-14]
\101\ George Skibine deposition, 11/17/95, pp. 152-153.
\102\ George Skibine deposition, 11/17/95, pp. 152-153.
\103\ ``Silent Witness: Senate investigators never called the one
man who could clear up the Babbitt case,''Washington Monthly, December
1997; ``The Non-Case Against Bruce Babbitt,'' Wall Street Journal, 12/
4/97.
\104\ Secretary Babbitt, 10/30/97 Hrg., p. 121.
\105\ 25 U.S.C. Sec. 2719 (1997).
\106\ 25 U.S.C. Sec. 2719(b)(1)(A).
\107\ 25 U.S.C. Sec. 2719(a)(1) (gaming is not to be conducted by
tribes on land acquired in trust by the Department of Interior after
1988, unless the land is within or contiguous to the tribes'' existing
reservation.)
\108\ Indian Country Today, 2/11/93 (Secretary Babbitt tells group
of western governors that Indian tribes should have some degree of
latitude from state gaming laws on federally recognized reservation
bases); The Economist, 5/29/93 (Secretary Babbitt negotiated an
agreement in his native Arizona between tribal and state government
that the tribes' casino gambling would be restricted to their
reservations).
\109\ Indian Country Today, 2/11/93 (Secretary Babbitt tells group
of western governors that Indian tribes should have some degree of
latitude from state gaming laws on federally recognized reservation
bases); The Economist, 5/29/93 (Secretary Babbitt negotiated an
agreement in his native Arizona between tribal and state government
that the tribes' casino gambling would be restricted to their
reservations).
\110\ George Skibine deposition, 11/17/97, p. 72.
\111\ George Skibine deposition, 11/17/97, pp. 74-75.
\112\ For example, Rep. Steve Gunderson, then-U.S. Representative
for the Hudson area of western Wisconsin, sent letters to Secretary
Babbitt (Exhibits 2522M, 2523M) asking about the truth of reported
allegations that the Interior's Minneapolis area office had recommended
approval of the trust application in the face of local opposition. Rep.
Gunderson enclosed expressions of opposition from within his district,
of which the following comment from Hudson resident Bob Bastian is
representative:
With 3200 signatures against the proposal, the majority of the business
community, and all the Indian tribes within a 100 miles of here dead set
against [the proposed casino in Hudson], the BIA in Minneapolis in all its
bureaucratic wisdom decided that wasn't sufficient opposition and OK'd the
proposal.
We've been through this before with overwhelming opposition (2-1 ratio) in
1988-89 we got the dog track shoved down our throats. Now it's happening
again. When does the majority's will ever count anymore other than in an
election?
\113\ Exhibit 1567: Draft memo from Tom Hartmann, Indian gaming
management staff, Interior Department, to George Skibine, director,
Indian gaming management staff, Interior Department re: Hudson casino
trust application, 6/8/95. [3194-3209]
\114\ Exhibit 1567: Draft memo from Tom Hartmann, Indian gaming
management staff, Interior Department, to George Skibine, director,
Indian gaming management staff, Interior Department re: Hudson casino
trust application, 6/8/95. [3194-3209]
\115\ Exhibit 2519M: St. Paul Pioneer Press, 10/4/94.
\116\ Exhibit 2519M: St. Paul Pioneer Press, 10/4/94.
\117\ Associated Press, 2/7/95. Beginning in early 1994, Gov.
Thompson had clearly and publicly expressed his opposition to any
expansion of gaming, including the Hudson proposal. Exhibit 2519M: St.
Paul (MN) Pioneer Press, 10/4/94.
\118\ Exhibit 2524M: several letters of opposition from state and
federal elected officials in Wisconsin.
\119\ Exhibit 2522M: Letter from Rep. Gunderson to Secretary
Babbitt re: local opposition to Hudson casino proposal, 1/25/95.
\120\ Exhibit 2523M: several letters of opposition from state and
federal elected officials in Wisconsin.
\121\ Exhibit 2524M: several letters of opposition from state and
federal elected officials in Wisconsin.
\122\ Exhibit 2521M: Letter from Steve Gunderson, former U.S.
Representative from Hudson, Wisconsin, to Ranking Minority Member Glenn
re: local opposition to Hudson casino proposal, 10/29/97.
\123\ George Skibine deposition, 11/17/97, Exhibit 10.
\124\ George Skibine deposition, 11/17/97, Exhibit 10.
\125\ George Skibine deposition, 11/17/97, p. 60.
\126\ George Skibine deposition, 11/17/97, Exhibit 9.
\127\ George Skibine deposition, 11/17/97, p. 43.
\128\ George Skibine deposition, 11/17/97, p. 39-40.
\129\ George Skibine deposition, 11/17/97, pp. 61-65.
\130\ 25 U.S.C. 465; George Skibine deposition, 11/17/97, p. 65.
\131\ George Skibine deposition, 11/17/97, pp. 66-67.
\132\ E-mail from George Skibine, director of the Indian gaming
management staff, to Miltona R. Wilkins, Tom Hartman, Paula Hart, and
Tona LaRocque, 7/8/95.
\133\ Department of the Interior Central Office Routing Slip, 7/8/
95.
\134\ George Skibine deposition, 11/17/97, p. 68.
\135\ Michael Anderson deposition, 9/19/97, pp. 58-59.
\136\ Michael Anderson deposition, 9/19/97, p. 43-46.
\137\ Michael Anderson deposition, 9/26/97, p. 67-68.
\138\ Michael Anderson deposition, 9/19/97, p. 40-41.
\139\ Secretary Babbitt, 10/30/97 Hrg, p. 117.
\140\ Michael Anderson deposition, 9/19/97, p. 48.
\141\ Michael Anderson deposition, 9/19/97, p. 48-49.
PART 6 ALLEGATIONS OF QUID PRO QUOS
Chapter 36: Tobacco and the 1996 Election Cycle
On August 5, 1997, President Clinton signed into law a
landmark balanced budget agreement passed by the 105th
Congress.1 This agreement actually incorporated two
bills, a tax relief bill and the balanced budget
bill.2 Buried in the tax bill's ``miscellaneous
provisions'' section was a little-noticed, one-sentence, 46-
word provision that stated that tobacco companies would be
entitled to claim a tax credit of $50 billion based on a
settlement agreement in a major anti-tobacco civil litigation
matter. In that settlement agreement, tobacco campanies have
agreed to pay $368.5 billion over the next 25 years to settle
anti-tobacco lawsuits, compensate people injured by smoking,
and finance health programs. In return, the companies would
reduce their exposure in future lawsuits. This settlement has
not yet been approved by Congress or the President.3
---------------------------------------------------------------------------
Footnotes at end of chapter 36.
---------------------------------------------------------------------------
The Minority was interested in investigating how this
billion-dollar-a-word provision wound up in the balanced budget
agreement, particularly in light of the tobacco industry's
substantial political contributions to the Republican Party and
the tobacco industry connections to Haley Barbour, former
chairman of the Republican National Committee (``RNC'').
Tobacco companies gave more than $10 million overall in the
1996 election cycle, about $8.5 million to Republicans. During
the period when Barbour was chairman of the RNC, he attempted
to block unfavorable tobacco legislation at the federal and
state levels and lobbied against anti-tobacco litigation
brought by private individuals and state agencies. Just two
days after one of Barbour's interventions, one tobacco company
donated a half-million dollars to the RNC. After leaving the
RNC to return to his lobbying firm in early 1997, Barbour was
immediately retained as a lobbyist for the five largest tobacco
firms.
The Minority looked at the role tobacco played in the 1996
elections.
FINDING
During the 1996 election cycle, tobacco companies
contributed roughly $8.5 million in soft money to the
Republicans, much of which was raised by Haley Barbour. There
are grounds for suspecting that Barbour assisted the industry
in exchange for campaign money, but the Committee did not
investigate these troubling allegations.
THE TOBACCO INDUSTRY'S POLITICAL CONTRIBUTIONS DURING THE 1996 ELECTION
CYCLE
The tobacco industry gave roughly $10.1 million overall in
political contributions in the 1996 election cycle. According
to the nonpartisan Center for Responsive Politics, the industry
gave a total of $6.8 million in soft money to both parties,
most of it to the Republican Party.4 Tobacco PACs
and company employees contributed another $3.3 million to
federal candidates in the 1996 cycle, again most of it to
Republicans.5 In fact, Philip Morris Companies, Inc.
(``Philip Morris'') was the number one overall campaign
contributor in the entire 1996 election cycle with $4.2 million
in hard and soft money, with nearly 80 percent contributed to
Republicans.6 In addition to these campaign
contributions, tobacco firms in 1996 spent nearly $27 million
lobbying Congress and federal agencies. Philip Morris led the
way again, spending $19.6 million, according to federal lobby
disclosure forms.
In previous election cycles, the industry divided its
campaign contributions equally between the parties, but in the
1996 election cycle over 80 percent of tobacco's $10.1 million
in political donations went to Republicans. The GOP collected
$5.8 million in soft money from tobacco interests and tobacco
PACs and company executives contributed $2.5 million to
Republican candidates at the federal level. The two largest
soft-money donors to national Republican party committees were
Philip Morris with $2.5 million and RJ Reynolds/RJR Nabisco
(``RJR'') with $1.2 million.7
There are several likely reasons for the industry's
dramatic shift of support to the Republican Party. Shortly
after President Clinton took office, Administration officials
proposed sharp increases in cigarette taxes as a way of
financing the expansion of health care. Later, the President
proposed that the Food and Drug Administration (``FDA'') be
given the authority to regulate tobacco as a drug. In Congress,
Representative Henry Waxman (D-Calif.) chaired a subcommittee
that held hearings on the tobacco industry. Senator Richard
Durbin (D-Ill.), a House member from 1983 until winning
election to the Senate in 1996, clashed with the industry when
he pushed for smoking to be banned on all domestic flights.
On the state level, many Democrats were also supportive of
efforts to curb smoking in public places. State government
became the arena for one of the biggest threats to the
industry: a lawsuit by state attorneys general against tobacco
companies to recoup medical costs the states have incurred in
treating smokers.
Apparently, as part of an effort to thwart these and other
initiatives, the major tobacco companies contributed millions
of dollars on the Republican Party. Tobacco companies not only
gave directly to the RNC, they contributed to Speaker Newt
Gingrich's GOPAC, a political action committee; Senator Bob
Dole's Better America Foundation (``BAF''), a nonprofit think
tank; and to the Dole Foundation, a charitable entity linked to
the Senator. (Philip Morris and RJR each gave $100,000 to BAF.)
After Haley Barbour launched the National Policy Forum, a
Republican Party think tank, in the spring of 1993, tobacco
companies were among the biggest backers, contributing a total
of $445,000; the biggest contributions included $200,000 from
Philip Morris and $100,000 from RJR.
REPUBLICAN ASSISTANCE TO TOBACCO COMPANIES
According to published reports, the tobacco companies have
received valuable benefits in exchange for their political
``investments.'' Common Cause Magazine, citing a 1994 study
published in the Journal of the American Medical Association,
noted: ``House membersreceiving the most tobacco money were
14.4 times as likely to vote with the industry as members receiving the
least; in the Senate the number was 42.2.'' 8 Other examples
of Republican efforts on the industry's behalf include:
For nearly three years after the Republicans
took control of Congress in 1994, there was not a
single congressional hearing on cigarettes and
health.9 It was not until late 1997, after
the tobacco settlement was announced, that such
hearings were held. Even one long-time industry
advocate, Representative Thomas Bliley (R-Virginia),
began to criticize the industry, and his committee
subpoenaed hundreds of documents from tobacco companies
that, according to press reports ``apparently contain
more evidence that cigarette makers deliberately misled
the public about smoking's dangers.'' 10
In the 104th Congress, pro-tobacco lawmakers
defeated efforts to strip funding for tobacco farmers
from the Agriculture Department's budget in both 1995
and 1996 11 and fought off attempts to raise
tobacco taxes and preserved millions of dollars in
federal subsidies, including the ability to take tax
deductions for advertising costs.12 In 1994,
the tobacco industry spent nearly $5 billion on
advertising.13
Other tobacco-related legislation in the
104th Congress never came to a vote. For example,
Representative Scotty Baesler (D-Ky.) bill, that would
have codified the federal government's authority to
regulate tobacco, died in committee.14
During the 1996 presidential campaign, GOP
candidate Bob Dole made clear that he also was opposed
to giving the FDA increased authority to regulate
tobacco. Dole stated that he did not regard smoking as
an addiction. In his view, it was merely a habit--like
drinking milk.15 Even after Dole was widely
criticized for that statement, he repeated his
assertion that smoking was not addictive.16
After Dole's statement, Barbour was asked if
he thought smoking was addictive, but he refused to be
pinned down. In the words of a press report, the RNC
chairman ``effectively dodged a reporter's insistent
questioning on whether he believes cigarette smoking is
addictive.'' 17 Barbour explained that he
couldn't answer the question because he was not a
scientist or a chemist.18
HALEY BARBOUR ASSISTED TOBACCO
Haley Barbour became RNC chairman in January 1993 and
served a four-year term. During his tenure, he was
unquestionably the party's top fundraiser. Documents obtained
by the Committee indicate that Barbour was heavily involved in
raising money from the tobacco industry.
One RNC document the Committee received is a handwritten
note from Barbour to Craig Fuller, the Philip Morris official
in charge of lobbying. In the note, Barbour thanked Fuller for
a $50,000 contribution and mentioned that he was ``working on a
replacement for John Moran''--the RNC finance chairman--which
suggests that he wanted Fuller to propose someone for the
job.19 Barbour and Fuller had worked together in the
Reagan Administration: Barbour served in the White House
political affairs office while Fuller was Vice President Bush's
chief of staff.20
At the same time Barbour was collecting millions of dollars
from Fuller and other tobacco-industry executives, he was
contacting state-level politicians on the industry's behalf,
according to press reports. In the spring of 1995, Mark
Killian, a conservative Republican who served as speaker of the
Arizona House of Representatives, received a telephone call at
his home from Barbour. Killian later said he thought Barbour
might be calling ``to congratulate us on Arizona's ability to
bring forth the revolution on tax cuts and welfare reform and
medical savings accounts.'' 21 However, according to
Killian, the real purpose of Barbour's call was to push a piece
of legislation that was supported by the tobacco
industry.22 This was a so-called ``pre-emption''
bill that would have prevented cities from imposing smoking
rules more restrictive than those enacted at the state level.
Barbour apparently urged Killian to let the bill go to a vote.
Barbour later claimed ``that he was simply making routine
checks on the status of legislation, not attempting to impose
pressure,'' according to a press report.23
Killian, a longtime opponent of smoking, said he was
angered by Barbour's call. ``It made me mad,'' he said. ``And I
said no.'' 24 According to a press report, Killian
``said he ended up blocking the bill because he thinks `cities
ought to be able to make their own rules and regulations.' But
he said another factor in his decision was his anger that Mr.
Barbour got involved in the matter.'' 25 In March of
1996, Killian ``joined with Democrats in urging [Arizona]
Attorney General Grant Woods to join the lawsuit initiated by
Mississippi against such tobacco giants as Philip Morris and
RJR Nabisco.'' 26 Killian said: ``I think it's a
great idea. I think the tobacco companies have been ripping off
this country for years.'' 27
Also in the spring of 1995, Barbour telephoned Republican
Governor George W. Bush of Texas ``to check on a bill to
prevent cities from adopting strict smoking restrictions,''
according to the Wall Street Journal. ``He was told the bill
would be vetoed, and it was.'' 28 A story in the
Arizona Republic on that incident stated that Barbour had
called Bush to encourage Texas ``to drop legislation opposed by
the tobacco industry.'' 29
On October 16, 1996, Barbour flew to Arizona to attend a
Republican fundraising event and he met with Governor Fife
Symington. The next day, Governor Symington ordered Arizona
Attorney General Grant Woods, a fellow Republican, to drop his
lawsuit against the major tobacco companies.30 Woods
ignored the order and continued pursuing the
lawsuit.31 One day after Governor Symington issued
the order, Philip Morris contributed $500,000 in soft money to
a Republican party committee, according to FEC records.
Although spokesmen for both Governor Symington and Barbour
denied that the tobacco litigation came up during the October
16 meeting,32 there are grounds for skepticism. Ron
Motley, a lawyer involved in the tobacco litigation, told a
reporter that Barbour ``just runsaround the country trying to
stop these lawsuits.'' 33 Symington's credibility was
damaged on September 3, 1997 when he was convicted on federal criminal
charges.34
TOBACCO SETTLEMENT AND THE $50 BILLION TOBACCO TAX CREDIT
The tobacco companies are currently seeking congressional
approval of a proposed settlement of the multi-state litigation
and have contributed large sums of money to the party most
likely to take a pro-industry line. During the month of June
1997--just before the settlement was announced--Philip Morris
and RJR each donated $100,000 in soft money to the RNC. Between
January 1 and June 30, the two companies gave a total of
$575,000 to the RNC.
The tobacco companies have also mounted a major lobbying
campaign to win support for the settlement. One of their
lobbyists is Haley Barbour, whose firm was retained in early
1997 ``for six figures per month by the nation's five biggest
tobacco companies--including Philip Morris'' according to a
press report.35 Barbour's firm was hired just weeks
after Barbour stepped down from his post as RNC chairman.
On September 29, 1997, Time magazine reported that Barbour
was behind the $50 billion tobacco tax break. Citing anonymous
Republican Party officials as sources, the magazine stated that
Barbour persuaded Speaker Newt Gingrich and Senate Majority
Leader Trent Lott to put the tax break in the balanced-budget
agreement ``just minutes before it was inked.'' 36
When the provision was uncovered by freshmen Senators Richard
Durbin (D-Ill.) and Susan Collins (R-Maine), it was defeated by
vote in both the Senate and House and stripped from the bill.
USA Today reported on August 29, 1997 that the provision
had been written by tobacco industry representatives. Kenneth
Kies, staff director of the Joint Committee on Taxation, was
quoted as saying: ``The industry wrote it and submitted it, and
we just used their language.'' 37 Kies, as discussed
below, denies making that statement.
HALEY BARBOUR AND KENNETH KIES
In an effort to learn more about the tax break, Minority
Counsel wrote letters to Barbour's attorney and to Kenneth Kies
on September 10, 1997.
The letter to Barbour's attorney, Terrence O'Donnell,
included ten interrogatories for Barbour that the Minority
sought to have answered by September 19. Interrogatories were
sent because Barbour would not agree to a continuation of his
deposition that had been limited to the issue of foreign
contributions to the National Policy Forum. The interrogatories
asked Barbour about his fundraising from and lobbying
activities for the tobacco industry in general and the
companies Philip Morris and RJR in particular. Barbour was also
asked about his lobbying of state and local officials regarding
legislation or regulation affecting the tobacco industry. Most
importantly, Barbour was asked about his alleged role in
inserting a provision in the balanced budget agreement of 1997
that would give tobacco companies a $50 billion tax credit in
connection with the tobacco settlement.38
On September 19, O'Donnell replied with a letter in which
he noted that Barbour had already testified. He also questioned
the legal authority of the Minority's request and how the
interrogatories related to the Committee's mandate
39 Minority Counsel responded on September 24 with a
letter clarifying the Minority's request and noted that former
White House Deputy Chief of Staff Harold Ickes was deposed
twice for a total of over two and a half days, thus the request
for more information from Barbour was not unusual. The letter
also explained that the interrogatories were within the scope
and mandate of the Committee because the tobacco industry was a
major contributor of soft money during the last election,
especially to the Republican Party. Finally, the letter
suggested that answering these interrogatories would provide
Barbour with a forum to rebut the Time magazine assertion that
he was directly involved in the $50 billion tax credit for the
tobacco industry. Without a response, the letter stated that
the Minority ``will assume the article to have been correct.''
40
The Minority received no response.
The September 10 letter to Kies asked him to agree to a
brief interview with Committee staff to discuss the statement
attributed to him by USA Today and more importantly ``to
identify the lobbyist who presented the provision as well as
the company he represented.'' 41
On September 30, after receiving no response from Kies,
Minority Counsel sent a follow-up letter to Kies asking again
for a brief interview to discuss the $50 billion tax credit for
the tobacco industry and its possible connection to numerous
campaign contributions by the industry during the 1996 election
cycle.42 On October 7, Kies responded with a letter
to Senator Glenn in which he stated that he had submitted a
letter to the editor of USA Today that was published on
September 19.43 In the USA Today letter, Kies
disavowed the quotes attributed to him in the original article:
``Contrary to the erroneous quote attributed to me, [the
statutory language] was drafted by the legislative drafting
staff of the House and Senate.'' 44 Furthermore,
Kies stated in his USA Today letter that he ``did not meet with
any representative of the tobacco industry during any time that
the tax bill was under consideration.'' 45 He
suggested that ``inquiries concerning the so-called tobacco
credit provision'' should go to ``the conferees on the 1997 tax
bill.'' 46 Kies did not comment on whether a tobacco
industry representative could have written the language for the
provision and gotten it submitted without meeting with Kies.
Moreover, USA Today did not publish either a retraction or a
correction of its story.
While no one openly acknowledges all of the details
surrounding the attempt to secure the $50 billion tobacco tax
credit, the evidence clearly suggests that top Republicans were
involved. The Washington Post reported that ``at least two days
before most people realized it--the Gingrich-controlled House
Republican Conference posted on the Internet a list of
congressional `Republican Wins' in the budget and tax bills.
Included among them was the $50 billion credit provision for
the tobacco industry.'' Furthermore, according to the Post, not
only were the GOP leaders ``among Congress's top recipients of
tobacco industry funds [over the last ten years]: Lott got
$50,250 and Gingrich $72,750,'' but ``some in Congress''
suggest ``the lobbying firm of former Republican national
chairman Haley Barbour and R.J. Reynolds pushed'' for the
provision.47 Finally, Washingtonian magazine
directly linked Barbour and the $50 billion tax break by citing
``insiders'' who say that Barbour ``slipped it into the bill
himself while working with awed legislative staffers who were
drafting the measure.'' 48
As with most other avenues of the Minority's investigation,
the tobacco inquiry encountered several obstacles. Barbour,
through his attorney, failed to respond to the Minority's
interrogatories and refused to continue his deposition or
otherwise clarify his role in the $50 billion tax credit.
Committee Chairman Thompson also rejected the Minority's
request to issue a second hearing subpoena to Barbour to
explain publicly his role in obtaining the $50 billion tobacco
tax credit.
CONCLUSION
The tobacco industry is a major funder of the Republican
Party through hard and soft money. Former RNC Chairman Haley
Barbour, who raised much of this money, has by all accounts
used his influence to assist the industry on the state and
federal levels. Perhaps the biggest payoff for tobacco's $8.5
million investment in the Republican Party during the 1996
election cycle was the effort to include a $50 billion tax
credit for the tobacco industry in the 1997 balanced budget
agreement.
FOOTNOTES
\1\ This legislation is actually two laws, Public Law 105-33 and
Public Law 105-34. Public Law 105-33 is the Balanced Budget Act of
1997. Public Law 105-34 is the Taxpayer Relief Act of 1997. Both were
signed into law on August 5, 1997.
\2\ The tax relief bill was H.R. 2014, the Revenue Reconciliation
Act of 1997. The balanced budget bill was H.R. 2015, the Balanced
Budget Act of 1997.
\3\ Washington Post, 8/17/97.
\4\ Keen, Jennifer and John Daly. Beyond the Limits. Washington,
D.C.: Center for Responsive Politics, 2/97.
\5\ Makinson, Larry. The Big Picture: Money Follows Power Shift on
Capitol Hill. Washington, D.C.: Center for Responsive Politics, 11/97.
\6\ Makinson.
\7\ Keen and Daly. One of the $100,000 corporate ``sponsors'' of
the Republican presidential nominating convention in San Diego was
Philip Morris. Additionallly, the company contributed about $200,000 to
help stage the presidential debates. Tobacco firms also sprinkle
contributions among Washington think tanks and advocacy organizations
that support their views, mostly libertarian or free-market oriented
groups that lobby against government interference in the economy. These
include Citizens for a Sound Economy, the Competitive Enterprise
Institute, the Progress and Freedom Foundation, and the American Civil
Liberties Union. Philip Morris made headlines in 1996 when reporters
discovered the company was the major funder of Contributions Watch, a
non-profit group that conducted state-level research on money and
politics. The group released a major study on contributions from trial
lawyers. (Watzman, Nancy; James Youngclaus; and Jennifer Shecter.
Cashing In: A Guide to Money, Votes, and Public Policy in the 104th
Congress. Washington, D.C.: Center for Responsive Politics, 1/97, p.
39.)
\8\ Common Cause Magazine, Winter 1995.
\9\ New York Times, 6/27/96.
\10\ Wilmington Star-News, 12/7/97.
\11\ Watzman, et al, p. 39.
\12\ Watzman, et al, p. 39.
\13\ Watzman, et al, p. 39.
\14\ Watzman, et al, p. 39.
\15\ Washington Post, 6/22/96.
\16\ Reuters North American Wire, 6/28/96.
\17\ Roll Call, 7/8/96.
\18\ Roll Call, 7/8/96.
\19\ RNC documents R050910-R050911.
\20\ Washington Post, 8/3/91; National Journal, 6/28/86.
\21\ Wall Street Journal, 2/20/96.
\22\ Wall Street Journal, 2/20/96.
\23\ Washington Post, 7/6/96.
\24\ Arizona Republic, 2/15/96.
\25\ Wall Street Journal, 2/20/96.
\26\ Arizona Republic, 3/23/96.
\27\ Arizona Republic, 3/23/96.
\28\ Wall Street Journal, 3/1/96.
\29\ Arizona Republic, 10/23/96.
\30\ Arizona Republic, 10/23/96.
\31\ Arizona Republic, 10/23/96.
\32\ Arizona Republic, 10/23/96.
\33\ Arizona Republic, 10/23/96.
\34\ Arizona Republic, 9/4/97.
\35\ National Journal, 3/29/97.
\36\ Time, 9/29/97.
\37\ USA Today, 8/29/97.
\38\ Letter from Minority Counsel to Terrence O'Donnell, 9/10/97.
\39\ Letter from Terrence O'Donnell to Minority Counsel, 9/19/97.
\40\ Letter from Minority Chief Counsel to Terrence O'Donnell, 9/
24/97.
\41\ Letter from Minority Counsel to Kenneth Kies, 9/10/97.
\42\ Letter from Minority Chief Counsel to Kenneth Kies, 9/30/97.
\43\ Letter from Kenneth Kies to Senator Glenn, 10/7/97.
\44\ USA Today, 9/19/97.
\45\ USA Today, 9/19/97.
\46\ USA Today, 9/19/97.
\47\ Washington Post, 8/17/97.
\48\ Washingtonian, 1/98.
PART 6 ALLEGATIONS OF QUID PRO QUOS
Chapter 37: Cheyenne-Arapaho Tribes of Oklahoma
The Committee investigated allegations that the DNC
solicited $100,000 from a politically naive and poor Native
American tribe; improperly granted tribal members access to the
President of the United States; and illegally promised the
return of historic tribal lands currently used by the federal
government in a quid pro quo exchange for a contribution from
the Tribes' ``welfare'' fund. The evidence discovered in the
course of the investigation, however, shows that the DNC did
not solicit a contribution from the Tribes; the Tribes were
very active in state and federal elections in 1996; they did
not have a ``welfare'' fund; and neither the Administration nor
the DNC acted improperly or illegally in response to the
Tribes' efforts to regain the Fort Reno, Oklahoma tribal lands.
FINDINGS
(1) No arrangement existed, or was ever contemplated,
between the Cheyenne-Arapaho Tribes of Oklahoma and the
Democratic National Committee or the Administration to return
tribal lands held by the federal government to the Tribes in
exchange for a political contribution to the DNC.
(2) The evidence before the Committee supports the
conclusion that the DNC and the Administration acted properly
and legally throughout the course of their dealings with the
Tribes.
OVERVIEW
To fully understand the significance of the events that
took place with respect to the Cheyenne-Arapaho Tribes of
Oklahoma (the ``Tribes'') during the 1996 election cycle, and
to put each of these events in their proper context, it is
important to understand the Tribes' efforts over the past
fifteen years to obtain the subsurface mineral rights for the
historic tribal lands located in Fort Reno, Oklahoma, that are
currently used by the federal government.
In the 1800's, the federal government carved approximately
10,000 acres out of land held by the Cheyenne and Arapaho
Tribes and established a military reservation known as Fort
Reno. The Fort Reno lands are located in Canadian County,
Oklahoma, and there is ``ample evidence of oil and gas deposits
under much of the area.''\1\ The Department of Agriculture
currently utilizes the bulk of the Fort Reno lands for an
agriculture research station (``ARS'') and the Department of
Justice also operates a prison on a portion of the site.
---------------------------------------------------------------------------
Footnotes at end of chapter 37.
---------------------------------------------------------------------------
In 1975, Congress created a legislative mechanism known as
the Surplus Property Act \2\ that allows Native American tribes
to seek recovery of former tribal lands from the federal
government.\3\ Under the Surplus Property Act, tribes are
entitled to the restoration of their lands if those lands are
declared excess federal property. For the past fifteen years
the Cheyenne-Arapaho Tribes have aggressively lobbied Congress,
as well as the Reagan, Bush, and Clinton Administrations, in an
effort to obtain the subsurface rights to the Fort Reno lands
under the Surplus Property Act.
In 1990, Eddie F. Brown, President Bush's Assistant
Secretary for Indian Affairs in the U.S. Department of the
Interior, confirmed in a letter to Senator Daniel Inouye that
``the Fort Reno property, were it declared excess federal
property, would satisfy the requirements of the Oklahoma
provision of the Surplus Property Act'' and could be
transferred to the Department of the Interior to be held in
trust for the benefit of the Tribe.\4\ In 1993, the Tribes
enlisted the services of Patton, Boggs & Blow to make their
case that the lands should be declared excess. The firm wrote
to the General Counsel of the U.S. Department of Agriculture,
``as you know, the Cheyenne and Arapaho Tribes have requested
that the [USDA] declare excess to its needs the subsurface
rights to an area known as the Fort Reno Lands.'' \5\ The firm
explained that the Tribes sought to ``develop the subsurface
minerals without undue disturbance to the surface'' which would
allow the USDA to continue operation of its agriculture
research station on the surface of the Fort Reno lands.\6\
On November 19, 1993, George B. Farris, Acting Director,
Office of Trust Responsibilities, Bureau of Indian Affairs,
United States Department of the Interior, stated in a letter
that the Bureau of Indian Affairs supported the return of the
Fort Reno lands to the Tribes if the requirements of the
Surplus Property Act were satisfied. Mr. Farris wrote:
As you know, it is the position of the Bureau of
Indian Affairs that if the Fort Reno lands are declared
excess Federal property by the Department of
Agriculture, the property would satisfy the
requirements of the Oklahoma provision of the Surplus
Property Act [40 U.S.C. Sec. 483(a)(2)(1982)] and the
lands should be returned to the tribes. We are
certainly in support of the subsurface rights to these
lands being returned to the Cheyenne and Arapaho
Tribes.\7\
Up to 1993, the Tribes' efforts had focused on obtaining
use of the subsurface rights of the Fort Reno lands in a manner
which would not disturb the ARS operated by the USDA or the
federal prison. By gaining the right to drill oil on the Fort
Reno lands, the Tribes would have reaped substantial financial
rewards. In 1994, however, the Tribes saw an opportunity to
obtain the surface rights to the lands as well.
THE BATTLE OVER THE CLOSURE OF THE FORT RENO ARS
In early 1994, the Clinton Administration released its
proposed budget for fiscal year 1995. This budget proposal
called for the closure of the USDA's agriculture research
station operated on the Fort Reno lands because it was outdated
and inefficient compared to other similar research facilities.
The Congressional Research Service (``CRS'') had reviewed the
productivity of the five scientists working at the Fort Reno
ARS, and after comparing it to other research facilities, had
found that there were similar research facilities located in
Miles City, Montana and Clay Center, Nebraska that proved to be
more modern and more productive than the Fort Reno facility
which it termed ``outdated.'' \8\
Closure of the research station would likely have resulted
in the Fort Reno lands being declared excess federal property
and consequently returned to the Tribes pursuant to the Surplus
Property Act. However, the Oklahoma congressional delegation
opposed the Clinton Administration's proposal to close the ARS.
On February 7, 1994, Congressman Frank Lucas wrote to the
chairman of the subcommittee of the Appropriations Committee
responsible for the USDA budget and urged him to preserve
funding for the Fort Reno agriculture research station.\9\
According to tribal attorney Rick Grellner, during a May 1994
meeting with representatives of the Tribes, a staff member for
Lucas argued that Congress had to restore funding for the Fort
Reno ARS or the Tribes would get the land.\10\
In the summer of 1994, tribal representatives traveled to
Washington, D.C. a dozen times to lobby Members of
Congress.\11\ They received no support, however, from the
Oklahoma delegation. According to Archie Hoffman, a Cheyenne-
Arapaho tribal leader, Ryan Leonard, an aide to Senator Don
Nickles, told the Tribes at that time that they did not get
attention because they were not involved politically.\12\ The
New York Times reported Hoffman's account of one of these 1994
trips:
Tribal leaders went to Mr. Nickles's office in
Washington, but they said a Nickles aide denied them an
opportunity to meet with the Senator. Mr. Hoffman said
that was when they decided to form a political action
committee and register thousands of American Indians to
vote.\13\
The Philadelphia Enquirer reported that the Tribes were told
that the reason their issues were not addressed was because
``Indians don't vote.'' \14\ In response, the Tribes registered
7,000 tribe members to vote and ``set out to make Oklahoma's
biggest donation to the Democrats.'' \15\
Although the Tribes did win an initial victory when the
Senate voted 76-23 in favor of closure of the Fort Reno ARS,
the Oklahoma congressional delegation continued to work to
restore $1.7 million in the House-Senate budget conference bill
to keep the station open. On July 25, 1994, Congressman Lucas,
Senator Nickles and Senator David Boren, co-signed a letter to
the Senate-House conferees on the fiscal year 1995 Agriculture
and Related Agencies Appropriations bill, urging them to
support an effort to restore funding for the Fort Reno
facility.\16\ These efforts ultimately proved successful, and
funding for the Fort Reno ARS was restored in the fiscal year
1995 budget.\17\
In a letter to a constituent, Senator Nickles described the
steps taken to save the Fort Reno ARS:
As you know, the Fort Reno research facility was
targeted for termination by President Clinton in his
1995 budget proposal. After the House agreed to the
President's proposal, I managed to amend the
agriculture funding bill to save the station from
closure. Then, regrettably, my amendment to fund Fort
Reno failed to survive Senate consideration.
Following Senate action on the agriculture funding
bill, I joined with Senator David Boren and Congressman
Frank Lucas in asking the joint House-Senate conference
committee to reinstate funding for this important
research facility . . . I then followed this letter up
with phone calls to the chief negotiators on the
bill.\18\
The Fort Reno ARS supporters won the 1995 budget battle,
but the Administration continued its effort to streamline the
government by eliminating an inefficient, outdated research
facility and the Tribes continued their effort to regain
control of the subsurface and surface rights to the Fort Reno
land on which the research station idled.
On November 8, 1994, less than two months after the Fort
Reno ARS was rescued from President Clinton's budget cuts, a
delegation from the Tribes met with officials at the Department
of Agriculture to propose a compromise that would enable the
Tribes to use the Fort Reno land, yet still keep the research
facility open, and allow the Veterans Department to establish a
national cemetary on part of the land.\19\ Elwood Patawa,
Director of Native American Programs for the Department of
Agriculture, drafted a memorandum for the Deputy Secretary in
which he outlined the compromise proposed by the Tribes. Patawa
explained:
This approach (the Tribes' proposal) satisfies the
Tribes, the veterans, the President's directives to
reinvent government, the [Agriculture] Department's
evaluation of the ARS station, the congressional
interest expressed in the FY95 Appropriation Act, the
Executive Order regarding arrangements of comity and
cooperation with tribal governments, the Surplus
Property Act, the Veterans Department process in citing
[sic] a cemetery in Oklahoma . . . \20\
At the same time, the Cheyenne-Arapaho obtained the help of
other Native American tribes in lobbying for the return of the
Fort Reno lands. Members of the Upper SiouxCommunity in Granite
Falls, Minnesota wrote to the Bureau of Indian Affairs in support of
the proposed transfer of the Fort Reno lands to the Tribes.
Throughout 1995, the Tribes continued to lobby local and
national government agencies and officials. Their efforts,
however, met with little success. Despite renewed attempts by
the Clinton Administration to delete funding for the Fort Reno
ARS in the fiscal year 1996 budget, Congress once again
restored the funding. Even the Tribes' effort to have the El
Reno, Oklahoma city council pass a resolution of support proved
unsuccessful. Although the vote on the resolution was 4-3 in
favor, the resolution failed because two council members did
not attend the meeting and because the council's operating
procedures required a resolution to receive at least 5 votes to
be official.
Several council members indicated that Senator Nickles had
intervened to ensure that the city council resolution would
fail. Council member J.P. Fitzgerald, who voted against the
resolution, and another council member who did not attend the
meeting, had agreed to support the resolution just a few days
earlier, before they were contacted by a member of Senator
Nickles' staff.\21\ According to press reports, council member
Fitzgerald said he voted against the resolution ``because U.S.
Sen. Don Nickles' staff told him that the Tribes' land claim
could not be intertwined with any cemetery resolution.'' \22\
Another council member, Matt White, who also voted against the
resolution, said, ``We gave Nickles what he asked for'' when
the council passed an earlier resolution that merely supported
the national cemetery and did not address the Tribes' land
claim.\23\
On December 11, 1995, ABC News aired a segment on the
Clinton Administration's effort to cut waste from the federal
budget, including ending the ``charmed life'' of the Fort Reno
ARS:
Peter Jennings: For our weekly look at how the
government spends your money, we look tonight at a
particular program that seems to have a charmed life.
Despite a decision by agriculture department officials
to shut this project down--it just keeps going on. . .
.
Senator Patrick Leahy (D-VT): What happens is that
they're strapped for money because the money is being
spent just propping up aging, decaying, obsolete
facilities in other parts of the country. Example: Fort
Reno, built in the 1880's, the USDA says it will cost
too much to modernize, $8 million.
John Martin: Everybody says they want to save money.
So why hasn't Congress closed Fort Reno and the others?
Well each of the stations has at least one die hard
patron who insists his station is too important to
close. So they stay open. Fort Reno's patron is Don
Nickles.
Senator Don Nickles (R-OK): We haven't put a lot of
money into building. What we have done is put research
in the ground.\24\
Restoration of funding for the Fort Reno ARS effectively
blocked the Tribes' effort to have the land declared ``excess''
by the departments of Agriculture and Interior. After losing
the budget battles in 1994 and 1995, the Tribes took a more
aggressive approach, deciding to hold political rallies and run
issue ads on the Fort Reno land issue.
THE TRIBES INCREASE THEIR POLITICAL ACTIVITIES
The Tribes, disappointed that funding for the Fort Reno
facility was restored by the Republican-controlled Congress,
planned a protest rally to be held at the ARS gates. According
to news reports, tribal member Archie Hoffman, ``said the rally
is to protest the proposed budget cuts in the Bureau of Indian
Affairs, U.S. Sen. Don Nickles' changing position on the
proposed national veterans cemetery, and the government's
unwillingness to return the Fort Reno land'' to the Tribes.\25\
Hoffman, according to the reports, stated that ``The state's
veterans need and deserve a national cemetery and the tribes
deserve their land back.'' \26\ Senator Nickles, through an
aide, responded to the proposed rally by saying, ``I am
disappointed the tribes are not willing to approve clear title
to the 130 acres for the national cemetery without a lot of
conditions.'' \27\
In November 1995, the Tribes spent over $100,000 to run two
60-second television advertisments on the Fort Reno issue.\28\
The text of the two ads illustrates the harsh tenor of the Fort
Reno dispute:
Ad One--Text
They call it a research station but little research is done
here and the Agriculture department wants it closed. Most of
the buildings sit empty. So does most of the land except the
part used by a handful of ranchers allowed to fatten their
cattle here. All this costs taxpayers $1.6 million a year. It's
a prime example of wasteful federal spending that Frank Lucas
and Don Nickles claim they're against. But Lucas and Nickles
keep voting for it. Taxpayers keep paying for it. And
somebody's cows keep getting fat.\29\
Ad Two--Text
7,000 acres near El Reno sit mostly unused. There's a run
down federal government research station that the Agriculture
Department would like to close. There's a historic cavalry fort
that few people visit. But there's an old Army graveyard that
the Veterans' Administration would like to make the center of a
new National Cemetery.
The cemetery would serve and honor Oklahoma veterans. The
old fort could be turned into a tourist attraction. The land
could provide jobs in ranching and energy. But all this
progress is being stopped by Senator Don Nickles and
Congressman Frank Lucas.
The Cheyenne-Arapaho Tribes claim rightful title to this
land but they've offered to give enough up for the cemetery if
the rest of it will be returned to the tribes. Veterans support
the idea. So does a majority of the El Reno city council. But
Nickles and Lucas keep saying no.
Tell Nickles and Lucas to stop playing politics and do
what's right for Oklahoma.\30\
In late November or early December 1995, members of the
Tribes' leadership met with former Oklahoma Attorney General
Mike Turpen to seek his help in lobbying for the return of the
Fort Reno lands.\31\ Rick Grellner, the Tribes' attorney,
suggested that the Tribes hire Turpen to lobby on their behalf
in Washington, D.C.\32\ Turpen told the Tribes he could not
make any guarantees, but he agreed to help set up meetings on
their behalf with federal agencies in Washington, D.C.\33\
According to Tribal chairman Charles Surveyor, Turpen made ``a
lot of contacts'' for the Tribes in Washington.\34\
In the spring of 1996, tribal representatives met with
Agriculture Department officials Larry Ellsworth, Mary McNeel,
Floyd Horn, Jim Snow, Michael Darrien and Richard Romniger for
one hour to discuss the Tribes' claims.\35\ Ironically, Horn
was the director of the Fort Reno ARS for the USDA before he
was transferred to Washington, D.C.\36\ The meeting with
Ellsworth and McNeel apparently went well but, according to
Turpen, he and Grellner had a confrontation with Horn in the
hallway after the meeting was finished. According to Turpen,
Horn said, ``Nickles will never let you have [the land].'' \37\
The tribal representatives also met with Justice Department
officials, including Craig Alexander (Tribal Affairs) and Kay
Lin Free (Native American Resources) to discuss the Tribes'
claims. The Tribes were advised to draft a letter to Bob
Anderson in the Solicitor General's Office at the Department of
the Interior laying out their legal claim to the land and the
argument that they had not been compensated by the U.S.
government.\38\
In late April or early May 1996, Grellner sent a letter and
a legal brief on the issues to Anderson.\39\ Anderson assigned
Brad Grenham to work with Grellner on this matter and they
spoke approximately twenty times during the Summer of 1996
about the Tribes' legal claims.\40\
THE TRIBES' CONTRIBUTION TO THE DNC
It appears that in early 1996 the Tribes also began to
consider getting involved in the political process by making a
contribution to the DNC. According to transcripts of a June 3,
1996 tribal meeting, the Tribes' contribution to the DNC was
first considered by tribal leaders in February 1996--three
months before they actually contacted the DNC. The transcript
quotes Tyler Todd as saying, ``back on February 12th [1996] was
the first time the Business Committee discussed giving a
donation to someone.'' 41 Hoffman, Todd, Tabor,
Surveyor and Grellner discussed the possible contribution many
times in February and March 1996 and during one of these
meetings, Hoffman said, ``why don't we make a $100,000
donation'' to the DNC.42 Although there have been
allegations that the Tribes were encouraged or even solicited
to make this contribution by Turpen, both Grellner and Todd
have stated that Turpen was not part of these discussions and
did not participate in the decision-making
process.43 Moreover, Turpen himself stated that the
contribution was entirely the Tribes' idea.44
On April 30, 1996, the Tribes' Business Committee
formalized their decision to contribute $100,000 to the
DNC.45 The Tribes' decision was re-affirmed in a
resolution passed by the leadership on July 9, 1996. The
resolution read, in part:
A majority of the Business Committee of the Cheyenne
and Arapaho Tribes on the previous occasions as far
back as of April 30, 1996, had agreed that the Tribes
should be involved in a positive manner in the
political process and as a result to contribute
$100,000 to the Democratic National Committee for the
exclusive purpose of voter outreach and voter education
for Native American voters.46
The deliberative steps the Tribes took before finalizing
their decision to contribute to the DNC indicates that they
were not a politically naive group, but rather, a politically
savvy organization which intended to bring attention to their
cause by making the largest political contribution in Oklahoma.
According to news reports, tribal leaders maintained that:
they knew exactly what they were doing, that they
approached the Democrats about giving money, that the
funds were in a savings account that hadn't been
earmarked for any other purposes, that they weren't
under any illusions it would automatically get the land
for them and that they were just doing what many other
groups do to get people here (Washington, D.C.) to
listen. ``It costs to get involved in the process,''
said Archie Hoffman, secretary of the tribes' business
committee.
Contrary to allegations that the Tribes were pressured into
contributing to the DNC by advisors or Democratic operatives,
interviews with members of the Tribes revealed that they had
very clear reasons of their own for wanting to contribute to
the DNC. According to Surveyor, the Tribes contributed to the
Democratic party because tribal members believed that Democrats
supported issues important to Native Americans, while
Republicans opposed them.47 As an example, Surveyor
cited a 1995 effort by the Republican-controlled Congress to
cut funding for many Native American programs, an effort which
was vetoed by President Clinton.48
Todd stated that the Tribes contributed to the DNC, in
part, because Republican Members of Congress had opposed their
efforts to regain the Fort Reno lands.49 The Tribes
also cited the need to counter the campaign donations that
Republican Members of Congress received from individuals and
organizations who supported the Fort Reno ARS as another reason
that they decided to contribute to the DNC. The Daily Oklahoman
reported on March 17, 1997:
Farmers and ranchers--whose political action
committees have given generously to Nickles and other
Oklahoma lawmakers--successfully lobbied to keep the
Agricultural Research Service station at Fort Reno,
despite Clinton Administration efforts to close it. . .
. Hoffman, the secretary of the Tribes' business
committee, said last week supporters of the research
station ``donate heavily'' to the campaigns of some
Oklahoma lawmakers. Lucas, who received donations last
year from a wide range of agriculture-related political
action committees, said he does, ``in a sense,'' get
campaign contributions from people who support the
research station, ``whether they're from El Reno or
farmers and ranchers across the district.''
50
Contrary to inaccurate press reports that the Tribes
contribution came from a ``welfare fund . . . normally used to
help tribal members who can't pay such things as heating-oil
bills,'' the evidence establishes that the Tribes do not have a
``welfare'' fund.51 The source of the funds used by
the Tribes for the DNC contribution was in fact accumulated
monthly fees paid to the Tribes for their management of a bingo
hall.52 The Tribes are paid $5,000 per month by the
Southwest Casino and Hotel Corporation to manage the bingo
games held at the Lucky Star Bingo Hall in Concho,
Oklahoma.53 The first $5,000 payment was paid to the
Tribes in July 1994.54 The Tribes deposited the
monthly management fees into certificates of deposit (``CDs'').
By February 1997, they had received over $140,000.55
The contribution to the DNC was the first time this revenue
source was used for any purpose by the Tribes.56
The Tribes' attorney confirmed in an interview with
Majority and Minority counsel that the Tribes did not have a
welfare fund and that the bingo management money had not
previously been used for anything by the Tribes.57
Both Surveyor and Todd also confirmed in their interviews that
the Tribes did not have a ``welfare fund'' and that the source
of the money contributed to the DNC was bingo management fees
that were deposited in CDs.58
There is no dispute that per capita income among tribal
members is very low and that unemployment is very high. Nor is
there any dispute that the money received by the Tribes from
the bingo operations could have been used for other purposes.
That, however, is adecision that belongs to the Tribes
themselves--and a decision apparently made by the Tribes themselves.
Moreover, it appears that the decision was made after the Tribes had
learned that they would be receiving more than $1 million in early 1996
from the settlement of a lawsuit.59
In May 1996, Surveyor, Todd, and Grellner met in Turpen's
law office in Oklahoma City where they informed Turpen that the
Tribes had decided to contribute $100,000 to the
DNC.60 Turpen then called Jason McIntosh, a friend
and staff person who worked at the DNC. Contrary to allegations
that the DNC had solicited the Tribes, McIntosh testified that
he learned for the first time of the Tribes' decision to
contribute money during this conference call.61
During the course of the conversation, McIntosh asked if the
Tribes could afford to make the contribution, and was informed
by the Tribes' leadership that they could.62 He
subsequently provided Turpen with instructions on how the
Tribes could wire their contribution directly to the
DNC.63 McIntosh testified that ``[i]n no way
whatsoever did I know anything about the tribe, their income
levels or anything of that nature until well into '97'' when he
read the March 1997 Washington Post article that broke the
story publicly.64 McIntosh also testified that he
did not recall any discussion about the Fort Reno land during
the course of the May 1996 phone conversation with Turpen and
the tribal leaders.65
THE WHITE HOUSE LUNCHEON
On or about June 10, 1996, Turpen was invited to attend a
small luncheon with the President at the White
House.66 According to McIntosh, Turpen was invited
because he was an ``active supporter.'' 67 Turpen
did not, however, make a political contribution in connection
with the White House luncheon.68 Terry McAuliffe
explained in his deposition that ``[a]t this time we were
trying to do some outreach to people who had been active and
wanted to be active.'' 69 McIntosh testified in his
deposition that it was indeed Turpen--not tribal members--who
was originally invited to attend the luncheon.70
When McIntosh informed Turpen that he was invited to attend
the White House luncheon, Turpen asked if two representatives
from the Tribes could attend in his place. In his deposition,
McIntosh explained:
Mr. Turpen basically just requested an accommodation
for him; that they be allowed to attend; that they were
active supporters or whatever and were going to be
politically involved and he wanted to make that request
[that tribal representatives attend the luncheon
instead of him]. . . .71 He just wanted
their name to be suggested instead of his. Instead of
him going, they go.72
According to McIntosh, when Turpen requested that tribal
leaders attend the lunch in his place, Turpen's name was
withdrawn from the guest list, and McIntosh then forwarded the
names of the tribal representatives to the White
House.73 McIntosh was not aware that the tribal
officials intended to talk to the President about the Fort Reno
land issue when he sent their names to the White House in mid-
June 1996.74
On June 12, 1996, Turpen called Grellner to inform him, for
the first time, that two tribal representatives could attend a
luncheon with the President at the White House on June 17,
1996.75 The Tribes accepted the invitation
immediately and decided to send Surveyor and Todd as their
representatives to the White House luncheon.76 The
tribal leaders had not known that they would be invited to the
White House for a luncheon with the President when they decided
to contribute $100,000 to the DNC in early 1996.
Surveyor,77 Grellner,78 and Hoffman
79 all confirmed this in interviews with the
Committee staff. Grellner also stated that there had been no
discussion of a White House luncheon during the Tribes'
conversation with McIntosh.80
On the morning of June 17, 1996, Surveyor, Todd and
Grellner met with McIntosh before they were escorted by
McAuliffe to the White House luncheon.81 An
assertion was made in the course of the Committee's
investigation that McIntosh demanded a check from the Tribes
during this meeting. Such a demand makes no sense, however, in
light of McIntosh's previous arrangements with Turpen to have
the money wired to the DNC. This assertion is also contradicted
by Surveyor, who said in his interview that McIntosh did not
ask for a check.82 McIntosh himself testified in his
deposition that, ``I asked them did they have any difficulty
wiring it [the contribution], because I knew since given wiring
instructions, they were going to transmit it that way.''
83 The tribal representatives told McIntosh that
they would be sending the contribution to the DNC by wire
transfer at a later date.84
The tribal representatives met with McIntosh for about five
minutes before he introduced them to McAuliffe for the first
time.85 The Tribes' attorney told the Committee
staff that McAuliffe did not appear to know anything about the
Tribes' contribution or the Fort Reno land issue when they
spoke with him.86 The Tribes gave McAuliffe a large
package of documents that included news clips, copies of
letters, and other background information regarding the Fort
Reno land.
After the brief meeting with McIntosh and McAuliffe,
Surveyor and Todd traveled by taxi with McAuliffe and another
staff person to the White House for the luncheon.87
After being admitted to the White House, Todd and Surveyor were
taken to the Green Room where they waited with a few other
people for the President to arrive.88 After
approximately 30 minutes, the President entered the room with a
photographer and chatted briefly with the guests about the
history of the Green Room before escorting the group to the
Blue Room for the luncheon.89 There were no assigned
seats at the table and Surveyor, who was the last person to sit
down, took the last vacant seat next to the
President.90
The President spoke briefly about world affairs, the
weather, and then, according to Surveyor, ``sat around and
listened to what everybody had to say.'' 91 Each
guest was given an opportunity to speak. When it was Todd's
turn, he deferred to the Tribes' chairman andpolitely declined
the President's invitation. Surveyor, who was the last to speak,
focused on Native American issues, health care, and
education.92 He also gave the President a brief history of
the Fort Reno land controversy.93
After listening to Surveyor, the President asked a staff
person present in the room, ``do we have anything on Fort
Reno?'' 94 The staff person pulled out the package
of documents the Tribes had given to McAuliffe earlier in the
day to show the President that they did have some information
on the issue.95 According to Surveyor, the President
said ``we'll see what we can do to help you,'' but made ``no
promises.'' 96 Todd did not think that the President
would take any action, but hoped that his interest would help
open some doors within the Administration.97
Surveyor said that there was no discussion about contributions
with the President or any of the other guests before, during,
or after the luncheon.98
Surveyor and Todd were escorted out of the White House by
McAuliffe. The press has reported misleading characterizations
offered by unnamed ``Senate aides'' of a post-luncheon
conversation between McAuliffe, Surveyor and Todd as apparent
evidence of a quid pro quo arrangement involving the Tribes'
contribution for the return of the Fort Reno land. The
Associated Press reported on October 13, 1997, that ``Senate
aides, speaking on condition of anonymity, said tribal
representatives told investigators that Terence McAuliffe,
Clinton's chief campaign fundraiser, assured Surveyor as they
left the luncheon, ``When the president makes a promise, he
keeps it.' '' 99 There is no evidence before the
Committee that substantiates this description of the
conversation. Tribal attorney Barry Coburn explained that
McAuliffe merely told Surveyor and Todd that if the President
says he will do something, he will do it.100
According to Coburn, Surveyor and Todd understood McAuliffe to
mean that the Administration would look into the matter, not
that their land would be returned.101
For his part, McAuliffe did not recall the post-luncheon
conversation with Surveyor and Todd, but he did testify that he
probably did say something positive.102 He further
stated that he had no further contact with the Tribes after the
lunch. ``Once we walked out of the White House, I never spoke
to these people again,'' he testified.103 He also
testified that he never spoke to anyone at the DNC, the White
House, the Clinton campaign, the Interior Department, the
Agriculture Department or anywhere else about the Tribes or the
Fort Reno land.104
There was no evidence presented to the Committee of any
quid pro quo arrangement involving the Tribes' contribution in
exchange for the return of the Fort Reno land. Indeed, in a
press release issued on June 28, 1996--almost a year before the
story first appeared on the front page of the Washington Post--
the Tribes made it clear that the President had made no
promises to the Tribes.
The press release indicated that the tribal representatives
had met with the President ``to discuss, Native-American
issues, the importance of the up-coming election in November
[1996] and how we as Native Americans and specifically the
Cheyenne and Arapaho Tribes can be pro-actively involved in the
process to help re-elect President Clinton and elect Democrats
to office.'' The press release also stated:
When asked about the content of the meeting Surveyor
responded, ``We discussed a lot of policy issues such
as the recent attack by the Republican Congress on the
Indian Child Welfare Act, Welfare Reform, cuts to
Native American programs and his positive support for
funding for the Indian Health Service.
``We discussed at great length the recent logjam over
the National Cemetery that has been created by Senator
Nickles and his willingness to pit the interests of
Native Americans regarding Fort Reno against the
community and voters support for the National Cemetery
without seeking common ground.''
The question Surveyor fielded was in regards to
anything specifically promised by the Administration
for the Tribes participation. In response Surveyor
snapped, ``Absolutely nothing. We simply wish to
support the cause and be involved in the process. I am
always a little skeptical at the reporter who is so
willing to attribute some sort of sinister motive to
our legal, ethical and proactive involvement in the
political process. Why don't they ask the executives of
the local financial institutions what they get for
supporting their Republican candidates. This is about
leadership, citizenship and our votes that need to be
counted. Nothing more, nothing less.'' 105
The evidence clearly shows that neither the President nor
McAuliffe made an explicit or implied promise that the Tribes
would obtain any benefit in exchange for their contribution to
the DNC. The Tribes' contribution was not discussed with the
President, and Surveyor and Todd confirmed that no promises
were made by either the President or McAuliffe during or after
the luncheon.
After the luncheon, McIntosh called Grellner approximately
three times to follow up on the Tribes'
contribution.106 According to McIntosh, Grellner
kept telling him that the money was on its way and he, in turn,
``would follow up each time that indication was given.''
107 On June 26, 1996, the DNC received a wire
transfer from the Tribes in the amount of $87,671.74. Upon
wiring the money to the DNC, Grellner told McIntosh, ``we'll
send more later.'' 108 McIntosh, however, did not
have any further contact with Grellner or the Tribes regarding
additional contributions.
Minority Counsel: Now the tribes' donation was
approximately $87,000 to the DNC. Did you ever follow
up to make sure that they contributed the original
$100,000 that they indicated that they would
contribute?
McIntosh: No, once that was done and once I told Mike
[Turpen] that, you know, hey, it's been received, that
was it. That was the end of my involvement with
Cheyenne-Arapaho Indians.109
Allegations have been made that the DNC and the
Administration somehow pressured or took advantage of the
Tribes. One news report stated that a Senator:
said in a prepared statement that it was unsettling to
learn that prominent figures in the administration's
campaign ``may have been engaged in what amounts to a
shakedown. And secondly, I am concerned that certain
tribal leaders may have used $107,000 from a fund
intended for needy tribal families as a payoff for
political favors. That's unconscionable.''
110
Surveyor and Todd, however, said that they did not believe the
Tribes were ``shaken down'' by the DNC.111 Todd
said, ``we made a decision and went after it. We're not going
to stop being politically involved.'' 112 ``We
didn't ask for anything, and we weren't promised anything,''
Todd said, adding that he never felt pressured to give money at
any time.113 Todd felt that ``the Cheyenne and
Arapaho Tribes [had] been more hurt by Senator Nickles' actions
than by the DNC.'' 114
Minutes from tribal meetings support the tribal
representatives' statements that the contribution was not the
result of any pressure from the DNC. On June 20, 1996, the
Tribes held a business committee meeting to discuss Surveyor
and Todd's trip to Washington to meet with the President.
During the course of this meeting, the Tribes discussed their
past political involvement and their goals for the future. One
unidentified speaker discussed the importance of being involved
in the political process:
We live in a world where things beyond our control
affect us. Unless we are willing to engage and be
involved in the process, however, imperfect as it has
been given to us, then we can't expect to be at the
table when those issues are determined, and that's how
it has been for the last several years, and that is how
it continues to be, unless we decide that we are going
to be involved.115
Another speaker agreed, ``we have to get involved in this
political process if we want to get anything done.''
116
One member of the Tribes asked Surveyor what kind of
commitment he had received from the President. Surveyor
responded, ``Well, in the first place, you don't go in and make
deals with the President. We go in and talk to him.''
117
Members of the Tribes discussed the impact that the
contribution would have in the future. One member stated, ``I
don't think anyone disputes that a contribution this large
would help the Tribes politically.'' 118 Others
cited the Cherokees who had been politically active for a long
time and were ``doing good'' as an example.119 This
statement was followed by the observation of one attendee who
said, ``I don't want to dispute that making a donation has an
impact, but I think it is the years of political influence that
they've had with Congress that has more to do with what the
Cherokees are receiving than any one donation that was made
recently.'' 120
The June 20, 1996 tribal meeting shows that the Tribes
understood the importance of their political activity and were
not political neophytes. They had a great deal of experience
interacting with the Oklahoma Congressional delegation and
federal agencies over the years. The television ads and voter
registration drives in 1995 and their political contributions
in 1996 illustrate their active political involvement.
The fact that the Tribes understood what they were doing is
reinforced by another business committee meeting held on July
9, 1996. During that meeting the members discussed the Tribes'
ability to afford the large contribution to the DNC, the
similarity between the Tribes and corporate contributors, and
another resolution re-affirming their commitment to contribute
to the DNC.
One unidentified speaker re-assured the members that they
could afford to make a large contribution to the DNC. He
reminded them that the Tribes knew in January 1996 that they
would receive close to $2 million from the ``Woods
settlement.'' 121 Another speaker discussed how the
Tribes contribution was similar to those made by corporations
and the perceived impact such contributions have on the
political process. He said:
You know, you talk about businesses and corporations.
You wonder why these large corporations you see in the
papers [inaudible]. I'll tell you what, dinero talks.
Any time you make large contributions when the state
governor sees that all these small tribes are better
off opposing this Bill 2208--because this contribution
to the Democratic Party is going to make him sit back
and say, ``Hey, now these guys are serious. We need to
reconsider some of these things.'' But that is the key.
Whenever you want recognition and you want to get into
any organization, when you pay your dues, you become
part of that. You have a voice.122
Hoffman stated during the meeting that the Tribes had
committed to making a $100,000 contribution to the DNC
previously but that they wanted to re-authorize the commitment
with another resolution. Another member of the Tribes expressed
a concern that they could not afford to make the contribution,
but Hoffman reassured them, again, that the ``Woods
settlement'' enabled the Tribes to make the
contribution.123 The July 1996 resolution passed by
the Tribes stated, in part:
Now, therefore be it resolved that, the Tribes have
previously located funds that have been received from
Tribal businesses for the accomplishment of this goal
and that a majority of the 30th Business Committee
hereby re-authorizes such expenditure and hereby
formalizes such support for the donation.124
the president's birthday fundraiser
The DNC used President Clinton's birthday as a centerpiece
for raising money at satellite events around the country in
August 1996. The Oklahoma satellite birthday event was
underwritten by the Tribes.
In the last week of July 1996, the Tribes were contacted by
Turpen, who asked if they were interested in sponsoring a
satellite birthday fundraiser in Oklahoma for the
President.125 Grellner told Turpen that the Tribes
would contribute $20,000 to be a sponsor of the birthday
event.126 The business committee voted to use
$15,000 more from the bingo management fees and borrow $5,000
from another corporate account.127
The invitations to the satellite birthday fundraiser state
that the event was ``underwritten by the Cheyenne and Arapaho
Tribes of Oklahoma.'' 128 Approximately 600 people
attended the satellite fundraiser at an Oklahoma City hotel. As
a thank you for their contribution, the Tribes were given floor
passes at the Democratic National Convention in Chicago,
Surveyor was invited to a reception for Vice President Gore,
and Todd attended a dinner with the Vice
President.129
When the Tribes decided to contribute $20,000 to pay for
the satellite fundraiser they did not know that they would be
invited to a dinner with the Vice President.130 That
dinner was held in July 1996 in Washington, D.C.131
Approximately 80 people attended the dinner. Todd represented
the Tribes and was seated at the Vice President's
table.132 Todd talked about health care and Indian
sovereignty issues during the dinner. During the dinner, the
Vice President reminisced about a family vacation he had taken
to Oklahoma when he was a small boy.133 He also
introduced Todd to Mitchell Berger, a Democratic activist who
was also seated at their table. Todd did not discuss the Fort
Reno land issue with either the Vice President or
Berger.134
In early August 1996, Surveyor attended an outdoor
reception with three busloads of people held at the Vice
President's residence in Washington.135 Surveyor
shook hands with the Vice President in a receiving line but had
no conversation with him about the Fort Reno land issue, or any
other matters.136
In late August 1996, Surveyor, Todd and Grellner attended
the Democratic National Convention held in
Chicago.137 In January 1997, Berger contacted Todd
to request a contribution from the Tribes to help pay for the
Inauguration ceremonies.138 Todd informed him that
he could not commit to a contribution, but that the Tribes
would have more moneylater.139 Todd did not feel
pressured to contribute to the DNC and told the Committee staff in an
interview that, ``If someone gave me $100,000, I'd call them again,
too.'' 140
the tribes continue their lobbying efforts
In addition to political contributions, the Tribes
continued to pursue their claim to the Fort Reno lands with the
appropriate federal agencies. In September 1996, Grellner met
with Anderson and Grenham at the Department of Interior offices
in Washington, D.C. to discuss the Tribes' claim that they had
not been compensated for the Fort Reno lands taken by the
federal government.141 The Interior Department
officials informed Grellner that there was a statute of
limitations problem barring any action, but that the Tribes did
have a meritorious claim.142 Anderson and Grenham
advised Grellner to address the statute of limitations problem
in a legal brief and to present equitable arguments for them to
consider also. Grellner stated in his interview that he
``never'' talked about the Tribes' contribution to the DNC with
Anderson and Grenham and that he never felt that he got
``special treatment'' from them.143 Surveyor
confirmed that the federal agencies he met with did not know
about the Tribes' contribution either.144
In October 1996, Grellner met with Anderson and Grenham of
the Interior Department, McNeel from the Agriculture
Department, and Free of the Justice Department to further
discuss the Tribes' legal claim.145 Anderson
reiterated the statute of limitations problem precluding any
legal action, but said that the Tribes did have a meritorious
equitable claim that they had not been compensated by the U.S.
government for the Fort Reno land.146 Anderson
agreed to prepare an Interior Department legal opinion
outlining their position for the Agriculture Department's
consideration.
In November 1996, Bart Miller replaced Grenham at the
Interior Department and Grellner met with Miller to discuss the
Tribes' claim.147 Miller was assigned the task of
drafting the legal opinion and he also expressed to Grellner
his belief that the Tribes had not been compensated for the
Fort Reno land.148 On February 21, 1997, Surveyor
and Grellner met with Ada Deer, the Assistant Secretary for
Indian Affairs, and Bart Miller to discuss the Tribes' legal
claim that they had not been compensated for the Fort Reno
land.149 Miller informed Grellner and Surveyor that
the Interior Department would have the long anticipated legal
opinion regarding this matter finished within two
weeks.150 As with all other meetings with
Administration officials, the Tribes' did not discuss their
contribution to the DNC with Deer.151
the tribes' dealings with mike copperthite, nathan landow, and peter
knight
In October 1996, Mike Copperthite, a campaign manager for a
congressional candidate in Arkansas, contacted Grellner and
solicited a contribution from the Tribes.152
Grellner conveyed Copperthite's request to Todd, who told him
that the Tribes' money was too tight to make a contribution to
Copperthite's candidate.153 Grellner, however,
contacted Copperthite and told him that the Tribes could ``come
up with $5,000 to $10,000.'' 154 The Tribes did not
themselves contribute to Copperthite's candidate, but,
according to FEC records, on November 13, 1996, Grellner
personally contributed $10,000 to the Arkansas Democratic Party
pursuant to Copperthite's request.155 Apparently in
exchange for the contribution, Copperthite told Grellner that
he would help the Tribes in their efforts to regain the Fort
Reno land after the campaign.156
Copperthite developed a close relationship with Grellner,
and the Tribes used him to set up meetings with people in
Washington after the election. One of the first meetings he
arranged was with real estate developer Nathan Landow. Landow
testified that he was first contacted by Copperthite in the
early part of October 1996.157 During that
conversation, Copperthite told Landow that he was representing
the Tribes and that he was interested in Landow's help. Landow
testified:
[Copperthite] told me that he had a client
representing the Cheyenne-Arapaho Indian Tribes and
that there was an interesting real estate development
that he thought I would be interested in. He suggested
to them that I was a person that they should talk to
and asked me if I would meet with them.158
After this initial conversation in October, approximately a
month and a half or two months passed before Copperthite called
again. After the November elections, Copperthite became
``pretty persistent'' to set up a meeting between the Tribes
and Landow.159 A phone message from Copperthite to
Landow dated November 15, 1996 states, ``some people are coming
in from out of town next week that he [Copperthite] wants you
[Landow] to meet.'' 160 A meeting eventually was
held on November 24, 1996, according to information included on
a phone message sheet from Copperthite to Landow.161
That meeting was attended by Surveyor, Grellner, Hoffman,
Copperthite and Landow.162 Copperthite testified
that he ``introduced Nate Landow to the tribe as a very dear
friend of the Vice President's.'' 163 Landow
testified that he understood that the Tribe wanted to meet with
him to discuss development of the Fort Reno
property.164 Landow learned, however, that the
Tribes did not own the land at that time and that they were
taking steps to regain it on a ``parallel but different
track.'' 165
During the meeting, the Tribes asked for help and
suggestions regarding their effort to regain the Fort Reno
land. Landow testified that he ``made it very clear that not
being a lobbyist, never having been involved with any business
or other issue in dealing with the Federal Government, that is
something that I certainly wouldn't undertake.'' 166
He didsuggest a few Washington lobbying firms that might help,
including ``Tommy Boggs's firm, J.D. Williams, Peter Knight's firm as
ones that I felt had the experience and the credibility and might be
able to help them.'' 167
The tribal representatives apparently knew from Copperthite
that Landow was close to Peter Knight and they asked Landow to
help set up a meeting with Knight's firm, Wunder, Diefenderfer,
Cannon & Thelen (``Wunder Diefenderfer'').168 Landow
testified:
they decided amongst themselves that that was one they
would like to talk to and asked if I would help set
that up, and I did. I made a call, and I agreed to
introduce them there. They said that they had other
appointments; that they might be talking to other
people.169
As the press has reported, ``everyone agrees that Landow
made no guarantees about doing anything to get the Fort Reno
land to the tribe. He offered to help develop the land if the
tribe got it.'' 170 There was no discussion during
the meeting with Landow about the Tribes' contribution to the
DNC.171
After the meeting, Landow contacted Wunder Diefenderfer to
set up a meeting with the Tribes the next day. Landow called
Grellner at his hotel that evening and told him that Jody
Trapasso at Wunder Diefenderfer was interested in meeting with
the Tribes to discuss how his firm could help them regain the
Fort Reno land.172 Landow told him that the firm was
very good and that they would not take the case if they could
not help the Tribes.173 Surveyor and Grellner met
with Landow and Trapasso at the Wunder Diefenderfer office in
Washington, D.C.174
The tribal representatives were told at the meeting that
Knight was not willing to commit to personally taking their
case at that time, but the firm would look into
it.175 Grellner was subsequently told that if Wunder
Diefenderfer did take on the case, their fee would include a
$100,000 retainer and $10,000 per month.176
Subsequent events suggest that this fee was too much for the
Tribes, but that Copperthite apparently continued to try to
interest the parties in doing business with each other.
From his first meeting with the Tribes in November 1996,
through the beginning of February 1997, Landow focused on the
need for a written agreement with the Tribes before he would
begin to perform work for them. Landow stated:
At every meeting, what I tried to get across was that
there had to come a time when any suggestions that they
had or interest that they had concerning getting me
involved would have to be reduced to writing, and my
track was that I was always moving in that direction,
to come to an agreement in writing so that there was
clear understanding between both parties as to show
their responsibilities would be, and I think that the
same thing was happening with Wunder
Diefenderfer.177
A meeting was scheduled for February 5, 1997, at the Wunder
Diefenderfer offices with the principles from the Tribes,
Wunder Diefenderfer, and Landow to finalize written agreements
with the Tribes.178 Ken Levine, Jody Trapasso, and
Peter Knight attended from Wunder Diefenderfer. The Tribes were
represented by Copperthite and Grellner.179 Landow
was upset to learn that Surveyor, the Tribal chairman, would
not be at the meeting.180 Landow testified:
I said, ``I thought I made it extremely clear that at
this meeting, it was critical that the chairman
[Surveyor] be there to finish the negotiations and
discuss the final terms of my agreement?'' And as late
as the day before, [Copperthite] had suggested to me
the chairman would be there.181
After learning that Surveyor would not be at the meeting,
Landow told Knight, Levine and Trapasso that it made no sense
for them to stay.182 According to Grellner, after he
learned that Surveyor was not going to attend the meeting,
Trapasso said he thought it was all a ``hoax'' and that the
Tribes were not interested in hiring the firm.183
Landow apparently had the same reaction.184
After Knight, Trapasso and Levine left the room, Grellner,
Copperthite, and Landow again discussed the details of a
written agreement. One of the details that apparently concerned
Grellner was the incorporation of the Bureau of Indian Affairs'
requirement that all contracts with tribes be approved by the
Bureau. Copperthite testified that Grellner had proposed a way
for Landow to circumvent the Bureau of Indian Affairs'
requirement.
Copperthite: Rick was trying to explain that because
of the Bureau of Indian Affairs' rules and regulations
that it would be much easier for Wunder Diefenderfer to
be retained under Rick's contract with the Bureau of
Indian Affairs than it would be to put together a
separate contract, then negotiate it with the tribe and
then have the BIA put their rubber stamp on it.
Counsel: The Bureau of Indian Affairs has to approve
contracts that tribes enter into?
Copperthite: All tribes. So--and I don't know that to
be true. I just know based on that conversation in that
room that day. It made sense to me. So Rick tried to
show him in his contract. Landow looked at Rick's
contract and said this is a piece of garbage, we can't
do this.185
During this meeting, Grellner, Copperthite and Landow also
discussed fees.186 Grellner agreed to draft a
contract and incorporate the terms proposed by
Landow.187 Landow confirmed that he discussed the
terms of the agreement with Grellner andCopperthite during
their meeting and that he spoke to Surveyor later in the day to discuss
the proposed agreement with him.188 Landow testified:
Up until that time, I had done nothing, not a phone
call, not a visit, nothing but stay on the same track,
``Let's negotiate. Let me hear where you're coming
from. Let me hear the terms that you would find
acceptable to have me involved and I will tell you mine
and the end result may be you don't want me, you don't
need me, not for what I'm asking for, but this is what
I think is a reasonable offer.'' 189
Landow testified that during this conversation
``[Surveyor] said he would prepare an agreement.''
190 Landow denied that he negotiated Wunder
Diefenderfer's fees, but he said he was aware of the amount
they were seeking.191
After the February 5, 1997 meeting with Landow, Grellner
prepared an agreement that included the terms they discussed,
and on February 14, 1997 he faxed it to Landow for his review
and consideration. The Tribes, however, apparently never
intended the agreement with Landow or Wunder Diefenderfer to be
enforceable. Coburn, another attorney for the Tribes, confirmed
to the Committee staff that Grellner purposefully drafted the
proposed agreement so that it would not be a valid or
enforceable contract.192 Surveyor, according to
Coburn, had said he would never sign the agreement even though
it was drafted by Grellner and faxed on behalf of the Tribes to
Landow.193 In his interview, Surveyor confirmed that
there was ``no way we would agree to that contract.''
194
When Landow received the proposed agreement he contacted
Surveyor to discuss the problems with the document drafted by
Grellner.195 Landow stated:
What I told him was the agreement was unacceptable in
its form and its terms . . . The main objection as to
the form was the fact that he lumped together the
consultants, Landow, and the terms of the agreement
with Wunder, Diefenderfer, which was totally
unacceptable . . .196
Landow was also concerned that the Tribes' proposed
agreement did not satisfy the Bureau of Indian Affairs
requirements. According to Landow:
There was a major concern, additional major concern
in this Consulting Services Agreement that Ken Levine
raised and that was pertaining to the fact that it
didn't conform, in his opinion, to the requirements of
the Bureau of Indian Affairs . . . A consulting
agreement or when they hire legal counsel, it's got to
be approved by the Bureau of Indian
Affairs.197
Landow met with Dan Press, an attorney familiar with the
Bureau of Indian Affairs requirements, to discuss the proposed
agreement with the Tribes. He testified that:
I met with him so that I could outline to him the
terms of what I wanted this agreement to say and we
could begin to negotiate, and that he was to build in
all of the requirements of the Bureau of Indian Affairs
so that if they agreed to it, we were pretty well
assured that the Bureau of Indian Affairs would agree
to it as well. . . .198
In order for it ever to become hard and firm, it
would have to be approved by them and that was
something that we did. The Indians never, as you can
see from their agreement, never addressed it, which
leads me to believe maybe they never thought it would
be placed in a position to be effective.''
199
The documentary evidence, deposition testimony, and witness
interviews suggest that tribal representatives, including
Grellner and Copperthite, misled Landow and Wunder Diefenderfer
throughout the negotiations. The tribal representatives were
informed very early in the negotiation process as to the amount
of money that Landow and Wunder Diefenderfer would request for
their services, and apparently objected to the fees as too
high; however, they never made that clear to either Landow or
Wunder Diefenderfer.
In a final attempt to obtain a binding agreement with the
Tribes, Landow's attorney redrafted a proposed contract, had
Landow sign it, and sent it to the Tribes for their
consideration on March 4, 1997. Landow explained that the
Tribes were persistent in their efforts to get him to act and
he was persistent in his efforts to formalize their agreement.
Landow testified:
They were very persistent--when I say they,
Copperthite calling--very persistent on proceeding,
trying to get me to do something. My persistence was in
trying to get them to reduce any understanding to
writing.200
Landow explained in his March 4, 1997 cover letter to
Surveyor that he had to separate Grellner's proposal into two
different contracts and include the Bureau of Indian Affairs
requirement that they approve the contract. The Tribes did not
sign Landow's proposed contract, however, and they never
entered into an agreement with him to develop the Fort Reno
land.
Copperthite later alleged that Landow had said that the
Tribes would never get the Fort Reno land back if they did not
finalize the deal with Landow and Wunder
Diefenderfer.201 Landow denied this allegation under
oath.
Minority Counsel: Did you indicate to them
[Copperthite and Grellner] in any way that if they [the
Tribes] didn't do a deal with you, they'd never get
their land back?
Landow: Absolutely not.202
Copperthite's credibility in making such allegations must be
evaluated in light of documentary evidence that, without
informing the Tribes, Copperthite had proposed a private deal
with Landow to share any ``commissions, payments, revenue, or
compensation from the Tribes.'' 203
On February 2, 1997, Copperthite had written a memorandum
to Landow in which he stated:
I would like to split with you equally any
commissions, payments, revenue, or compensation from
the Tribes, and I could go to work full time
representing the Tribes Land development. I would also
like to be the person who is the go-between the Tribes
and the DNC or any democrat seeking contributions.
I would like our agreement be between you and I for
now. I have gained the Tribes trust by not accepting
any remuneration (to date) and by being honest and
effective.204
Copperthite had suggested that Landow have the term of his
agreement extend for 25 years and that it be ratified by a
tribal resolution ``so that this deal is good no [matter] who
is the Chairman of the Tribes.'' 205 Landow
testified that he rejected Copperthite's proposal to enter into
a private agreement.206 Landow testified that he
already had been concerned with Copperthite's integrity, and
that the memorandum had raised even more questions. With regard
to Copperthite's memorandum, Landow testified:
. . . [I]t's pretty obvious that Mr. Copperthite had
a pretty deep and distinct self-serving interest in
this project, and I think this also backs up my
concerns of dealing with people that were of
questionable character and integrity and more or less
loose cannons. . .207
With regard to Knight's role, the evidence indicates that
his involvement with the Tribes was very limited. He attended
one meeting with tribal representatives on February 5, 1997 in
the Wunder Diefenderfer offices. Knight, Levine and Trapasso,
of Wunder Diefenderfer, were present at that meeting for only a
short period of time. Knight testified that he attended this
meeting because Landow asked him if he would stop in and say
hello to Surveyor. 208 Knight was at the meeting
roughly 4 minutes, when it was learned that Surveyor would not
be attending. When Landow said it wasn't worth their time,
Knight left.209
Knight also testified that he had no other conversations
with Grellner 210 and one other conversation with
Copperthite on a different subject matter.211 Knight
never spoke toTurpen 212 and he never talked to
officials at the DNC about the Tribes.213
In December 1996--about two or three weeks after his
original conversation with Landow regarding the Tribes--Knight
spoke with Trapasso in his firm and came to the conclusion that
he was too busy and that he did not have the expertise
necessary to work on the issue, but that the Wunder
Diefenderfer firm could handle it.214 Knight stated:
After I made a decision that I was not going to be
involved in the representation of the Indians--of the
Tribe--the question at that time was, is there anyone
else in my firm that would be interested in pursuing
that representation, or is this a matter that I should
attempt to refer to someone outside. And as with other
clients or prospective clients that have come in and
asked for representation, I try to make it a habit to
try to put them in hands that I think will be capable.
In this case, Mr. Trapasso and I indicated that
perhaps we should ask someone in the firm if they would
like to be part of this representation, and in fact we
did. We had a short conversation with Mr. Levine. He
indicated that he was interested in pursuing that, and
from that point forward, I don't believe I had--and I
don't believe that Mr. Trapasso had any further
dealings with this issue.215
Kenneth Levine did in fact prepare and sign a proposed
contract describing the terms under which the firm would assist
the Tribes in their effort to recover the Fort Reno
land.216 The Tribes did not sign Levine's proposed
contract, however, and they never entered into an agreement
with Wunder Diefenderfer to assist in their effort to recover
the Fort Reno land.
the tribes' dealings with cody shearer and terry lenzner
On March 10, 1997, the Washington Post published a lengthy
article regarding the Tribes, Fort Reno, the Tribes' DNC
contribution and dealings with Wunder Diefenderfer. It alleged
that the Tribes were led to believe that, in return for a
contribution, the Fort Reno lands would be returned to them. It
also alleged that they were being pressured into consulting
agreements with Landow and Wunder Diefenderfer. On March 12,
1997, Al Cilella, a Chicago oil man, contacted Tyler Todd of
the Cheyenne-Arapaho Tribe (who was an old acquaintance of
Cilella), and asked if he could help.217
Two months later, in late May or early June 1997, Cilella
contacted Cody Shearer 218 and asked if he could
introduce the Tribes to Shearer.219 A week or ten
days later, Cilella called back to invite Shearer to a lunch
meeting with the Tribes.220 The evidence is unclear
what, if anything, Cilella thought Shearer could do for the
tribes.
The luncheon in Washington, D.C. was attended by
approximately 14 people 221 including Surveyor,
Grellner, Cilella, Hoffman, Copperthite, Bob Musgrove, Shearer,
and Susan Arjoe, a lobbyist on Native American
issues.222 Shearer testified that he spent the whole
time at the lunch talking with Cilella, not the tribal
representatives.223 The lunch meeting was unfocused
and disorganized, so Cilella asked Shearer if he could bring
the Tribes' members to Shearer's house the next day. Shearer
agreed.224
The day after the luncheon meeting, approximately 12 people
arrived at Shearer's house for a meeting. During this meeting,
the tribal representatives explained the Fort Reno issue.
According to Shearer, he was told that Senator Nickles ``has
supporters that are interested in some mineral rights to our
lands'' and together, they were blocking the Tribes' efforts to
regain the Fort Reno lands.225 Shearer did not
believe he could be of assistance to the Tribes in this matter;
he suggested that the Tribes meet with Terry Lenzner of the
Investigative Group International (``IGI'').
Shearer contacted Lenzner's office and set up a meeting for
the next day.226 Lenzner confirmed during his
appearance in public hearings before the Committee that ``I
received a call from Mr. Shearer asking if we would be
interested in meeting with a group of Indians who had an
interesting problem. It was so complex that he could not
describe it to me telephonically.'' 227 Lenzner
explained to the Committee that he gets ``calls all the time
with people, would you meet with this group, they have a
problem, they think they need a factual investigation.''
228
Surveyor, Hoffman, Grellner, Shearer, and Arjoe met with
Lenzner and his partner Steven Green at IGI.229
Lenzner told the Committee that the meeting lasted
approximately an hour to an hour and a half.230 The
Tribes' representatives explained the history of the Fort Reno
land battle.231 Lenzner stated:
And then at some point, they raised the focus of the
inquiry they wanted me to pursue, and as we do with any
client, I said I would think about the problem that
they posed, and we would give them, as is standard
operating procedure, a memo, what we call in our office
a proposed investigative to-do list, which, Senator
Specter, is basically a list of investigative issues, a
menu of investigative issues that the clients can
review and choose to pursue or not to pursue, based on
their judgment of how effective they might be in
achieving the goal they seek, and we'd give them a
guesstimated budget to cover those investigative
issues.232
The cost of such an investigation was discussed and
Surveyor believed it was too much and that it was unlikely that
the Tribes would pursue this course of action.233
However, the Tribes did ask Lenzner to put together a proposal
and forward it to Grellner for the Tribes'
consideration.234
IGI prepared a proposal for the Tribes' consideration and
sent a copy to them. When they received Lenzner's investigation
proposal, Surveyor, Grellner and Hoffman agreed that it was too
broad and that they would not pursue this course of
action.235 Grellner nevertheless forwarded a copy of
Lenzner's proposal to Copperthite, who then contacted Newsweek
magazine, according to Grellner.236 Lenzner
testified that after the proposal was sent to the Tribes, ``we
never heard another word from this group'' or about their story
until an article describing Lenzner's proposal to the Tribes
appeared in the August 1, 1997 issue of Newsweek
magazine.237
THE TRIBES' CONTRIBUTION IS RETURNED
In March 1997, after publication of the Washington Post
article, Governor Roy Roemer, Chairman of the DNC, contacted
Surveyor to discuss the return of the Tribes' contribution.
Surveyor told Roemer that the Tribes did not want the money
back.238 According to Surveyor, they had made the
contribution in good faith because they supported the party and
the President.239 One week later, the DNC contacted
Surveyor again and told him that they wanted to return the
Tribes' contribution. Surveyor finally agreed that if the DNC
returned the money, the Tribes would not refuse it, but he
wanted to be clear that he was not asking for it
back.240
In an interview with Committee staff, Surveyor stated that
he did not believe the Tribes were hurt by the DNC, and that
the Tribes might contribute to the party in the
future.241 Surveyor explained that the Tribes had
received $1.6 million from a lawsuit in 1996 and he showed a
copy of a $5 million check the Tribes had received on May 28,
1997 as payment for another legal victory in which the Tribes
won the right to tax non-Native American business activity on
tribal lands.242 Todd explained that the Tribes had
contributed more money to local, state and congressional
candidates than they had to the DNC in 1996. He also said that
the Tribes intended to continue to be politically active.
CONCLUSION
There was no evidence presented to the Committee to support
the allegation that the DNC or the Administration entered into,
or ever contemplated, a quid pro quo arrangement to return the
Fort Reno land to the Tribes in exchange for a contribution to
the DNC. Surveyor and Todd, who attended the White House
luncheon with the President, each stated that the President
made no promises whatsoever to return the Fort Reno land to the
Tribes. Coburn, the Tribes' attorney, confirmed in his meeting
with the Committee staff that there was no promise made by the
DNC or the Administration to return the Fort Reno land to the
Tribes. The June 1996 press release issued by the Tribes more
than a year before the investigation of this matter quoted
Surveyor as denying that any promises were made by the
President. Newspaper reports consistently quoted tribal
representatives who stated unequivocally that there was no quid
pro quo arrangment or a Presidential promise.
There was similarly no evidence presented to the Committee
to support the allegation that the Tribes were pressured into
contributing to the DNC. The Tribes made the decision to
contribute on their own without being solicited by the DNC.
That decision was motivated by a desire to become involved in
the political process. The Tribes' subsequent reluctance to
accept the DNC's return of their contribution only serves to
underscore the Tribe's own belief that they had been neither
pressured nor taken advantage of by the DNC or the
Administration.
The money used for the contribution was not taken from a
tribal welfare fund, and the amount contributed was carefully
considered and decided upon in light of expected legal
settlements that ultimately provided the Tribes with more than
$6 million.
While some tribal representatives may not have been
satisfied with their dealings with Copperthite, Landow, Knight,
Shearer, or Lenzner, there was no evidence presented to the
Committee that any of those individuals in any way were acting
on behalf of, at the behest of, or even with the knowledge of
the DNC or the Administration.
footnotes
\1\ Daily Oklahoman, 10/30/83.
\2\ 40 U.S.C. Sec. 483(a)(2)(1982).
\3\ Public Law No. 93-599, amending the Federal Property and
Administrative Services Act, January 21, 1975.
\4\ Letter from Assistant Secretary for Indian Affairs, Eddie F.
Brown to U.S. Senator, Daniel K. Inouye, 9/7/90.
\5\ Jason McIntosh deposition, 10/29/97, Exhibit 7: Letter from
Katharine R. Boyce to Jeffrey T. Vail, United States Department of
Agriculture, Office of the General Counsel, 10/15/93.
\6\ Jason McIntosh deposition, 10/29/97, Exhibit 7: Letter from
Katharine R. Boyce to Jeffrey T. Vail, United States Department of
Agriculture, Office of the General Counsel, 10/15/93.
\7\ Jason McIntosh deposition, 10/29/97, Exhibit 8: Letter from
George B. Farris, Acting Director, Office of Trust Responsibilities,
Bureau of Indian Affairs to Katharine R. Boyce, 11/19/93.
\8\ Jason McIntosh deposition, 10/29/97, Exhibit 11: Jean M.
Rawson, Specialist in Agricultural Policy, Environment and Natural
Resources Division, Congressional Research Service memorandum,
``Grazinglands Research Facility at El Reno, Oklahoma, 7/7/94.
\9\ Jason McIntosh deposition, 10/29/97, Exhibit 9: Letter from
Congressman Frank Lucas to Congressman Joe Skeen, Chairman, Committee
on Appropriations, Subcommittee on Agriculture, Rural Development, Food
and Drug Administration, and Related Agencies, 2/7/94.
\10\ Staff interview with Richard Grellner, 8/21/97.
\11\ Staff interview with Richard Grellner, 8/21/97.
\12\ Staff interview with Archie Hoffman, 8/21/97.
\13\ New York Times , 8/12/97.
\14\ Philadelphia Inquirer , 3/10/97.
\15\ Philadelphia Inquirer , 3/10/97.
\16\ Jason McIntosh deposition, 10/29/97, Exhibit 13: Letter co-
signed by U.S. Senator Don Nickles, U.S. Senator David Boren, and U.S.
Representative Frank D. Lucas to U.S. Representative Joe Skeen, 7/25/
94.
\17\ Jason McIntosh deposition, 10/29/97, Exhibit 15: El Reno
Tribune, 9/21/94.
\18\ Jason McIntosh deposition, 10/29/97, Exhibit 16: Letter from
U.S. Senator Don Nickles to unidentified person at the Peoples National
Bank in El Reno, Oklahoma, 10/11/94.
\19\ Jason McIntosh deposition, 10/29/97, Exhibit 17: Elwood
Patawa, Director of Native American Programs, U.S. Department of
Agriculture, Informational Memorandum for Deputy Secretary regarding
11/8/94 meeting with Cheyenne and Arapaho Tribes of Oklahoma
delegation, 11/8/94.
\20\ Jason McIntosh deposition, 10/29/97, Exhibit 17: Elwood
Patawa, Director of Native American Programs, U.S. Department of
Agriculture, Informational Memorandum for Deputy Secretary regarding
11/8/94 meeting with Cheyenne and Arapaho Tribes of Oklahoma
delegation, 11/8/94.
\21\ Jason McIntosh deposition, 10/29/97, Exhibit 20: El Reno
Tribune, 9/13/95.
\22\ Jason McIntosh deposition, 10/29/97, Exhibit 20: El Reno
Tribune, 9/13/95
\23\ Jason McIntosh deposition, 10/29/97, Exhibit 20: El Reno
Tribune, 9/13/95
\24\ Jason McIntosh deposition, 10/29/97, Exhibit 26: News Release,
Cheyenne and Arapaho Tribes of Oklahoma, with attached transcript of
ABC NEWS story on the Fort Reno agriculture research station, 12/11/95.
\25\ Jason McIntosh deposition, 10/29/97, Exhibit 21: El Reno
Tribune , 10/1/95. The El Reno Tribune described the rally:
Rally coordinator Archie Hoffman told the approximately 150 people who
attended the event that the Tribes have tried to work with Nickles, but
have received little support in return. ``We took a plan to Washington,
D.C. and tried to get Nickles to back us up on the plan,'' Hoffman said.
``He said he would. When we got up there, he changed his stance.''
\26\ Jason McIntosh deposition, 10/29/97, Exhibit 21: El Reno
Tribune, 10/1/95.
\27\ Jason McIntosh deposition, 10/29/97, Exhibit 21: El Reno
Tribune, 10/1/95.
\28\ Hoffman stated that ``when Senator Nickles sabotaged the
council vote, the Tribes decided to run the t.v. ads.'' Staff interview
with Archie Hoffman, 8/21/97.
\29\ Jason McIntosh deposition, 10/29/97, Exhibit 24.
\30\ Jason McIntosh deposition, 10/29/97, Exhibit 24.
\31\ Staff interview with Barry Coburn, 9/16/97.
\32\ Staff interview with Tyler Todd, 8/21/97.
\33\ Staff interview with Barry Coburn, 9/16/97.
\34\ Staff interview with Charles Surveyor, 8/21/97.
\35\ Staff interview with Richard Grellner, 8/21/97.
\36\ Staff interview with Barry Coburn, 9/16/97.
\37\ Staff interview with Michael Turpen, 8/21/97.
\38\ Staff interview with Richard Grellner, 8/21/97.
\39\ Staff interview with Richard Grellner, 8/21/97.
\40\ Staff interview with Richard Grellner, 8/21/97.
\41\ Cheyenne-Arapaho Tribes of Oklahoma, Working Session
transcript, 6/30/96, p. 32.
\42\ Staff interview with Tyler Todd, 8/21/97.
\43\ Staff interview with Richard Grellner, 8/21/97; Staff
interview with Tyler Todd, 8/21/97.
\44\ Staff interview with Michael Turpen, 8/21/97.
\45\ Staff interview with Barry Coburn, 9/19/97.
\46\ Jason McIntosh deposition, 10/29/97, Exhibit 29: Cheyenne-
Arapaho Tribes of Oklahoma, Resolution No. 07099S167, 7/9/96.
\47\ Staff interview with Charles Surveyor, 8/22/97.
\48\ Staff interview with Charles Surveyor, 8/22/97.
\49\ In a March 11, 1997 article in the Daily Oklahoman, Todd was
quoted as saying that tribal officials began discussing ways ``to get
involved in the political process early last year [1996],'' and ``. . .
[Nickles] was a direct cause of it.'' Daily Oklahoman, 3/11/97. Todd
also told the Philadelphia Inquirer that ``[the Tribes] probably
wouldn't have done this in the first place if it weren't for Sen.
Nickles, because he is the one that has thwarted all our attempts to
get Fort Reno back.'' Philadelphia -Inquirer, 3/11/97.
\50\ Daily Oklahoman, 3/17/97.
\51\ Washington Post, 3/11/97.
\52\ Staff interview with Barry Coburn, 9/16/97.
\53\ Jason McIntosh deposition, 10/29/97, Exhibit 28: Memorandum
from Tyler Todd, Chairman, Business Development Corporation to Charles
Surveyor, Chairman, Cheyenne and Arapaho Tribes of Oklahoma Business
Committee, 4/23/97.
\54\ Jason McIntosh deposition, 10/29/97, Exhibit 28: Memorandum
from Tyler Todd, Chairman, Business Development Corporation to Charles
Surveyor, Chairman, Cheyenne and Arapaho Tribes of Oklahoma Business
Committee, 4/23/97.
\55\ Jason McIntosh deposition, 10/29/97, Exhibit 28: Memorandum
from Tyler Todd, Chairman, Business Development Corporation to Charles
Surveyor, Chairman, Cheyenne and Arapaho Tribes of Oklahoma Business
Committee, 4/23/97.
\56\ Staff interview with Barry Coburn, 9/16/97.
\57\ Staff interview with Barry Coburn, 9/16/97.
\58\ Staff interview with Tyler Todd, 8/21/97; Staff interview with
Charles Surveyor, 8/22/97.
\59\ Staff interview with Charles Surveyor, 8/21/97.
\60\ Staff interview with Barry Coburn, 9/16/97.
\61\ Staff interview with Barry Coburn, 9/16/97.
\62\ Staff interview with Richard Grellner, 8/21/97; Staff
interview with Barry Coburn interview, 9/16/97.
\63\ Jason McIntosh deposition, 10/29/97, p. 25.
\64\ Jason McIntosh deposition, 10/29/97, p. 23.
\65\ Jason McIntosh deposition, 10/29/97, p. 25.
\66\ Staff interview with Michael Turpen, 8/21/97.
\67\ Jason McIntosh deposition, 10/29/97, p. 32.
\68\ Jason McIntosh deposition, 10/29/97, p. 33.
\69\ Terence McAuliffe deposition, 9/18/97, p. 24.
\70\ Jason McIntosh deposition, 10/29/97, p. 28.
\71\ Jason McIntosh deposition, 10/29/97, p. 29.
\72\ Jason McIntosh deposition, 10/29/97, p. 29.
\73\ Jason McIntosh deposition, 10/29/97, p. 138.
\74\ Jason McIntosh deposition, 10/29/97, p. 137.
\75\ Staff interview with Barry Coburn, 9/19/97.
\76\ Staff interview with Barry Coburn, 9/19/97.
\77\ Staff interview with Charles Surveyor, 8/21/97.
\78\ Staff interview with Richard Grellner, 8/21/97.
\79\ Staff interview with Archie Hoffman, 8/21/97.
\80\ Staff interview with Richard Grellner, 8/21/97.
\81\ Staff interview with Barry Coburn, 9/16/97.
\82\ Staff interview with Charles Surveyor, 8/21/97.
\83\ Jason McIntosh deposition, 10/29/97, p. 41.
\84\ Staff interview with Barry Coburn, 9/16/97.
\85\ Staff interview with Barry Coburn, 9/16/97.
\86\ Staff interview with Barry Coburn, 9/16/97.
\87\ Staff interview with Barry Coburn, 9/16/97.
\88\ Staff interview with Barry Coburn, 9/16/97.
\89\ Staff interview with Barry Coburn, 9/16/97.
\90\ Staff interview with Barry Coburn, 9/16/97.
\91\ Philadelphia Inquirer, 3/10/97.
\92\ Staff interview with Charles Surveyor, 8/21/97.
\93\ Staff interview with Charles Surveyor, 8/21/97.
\94\ Staff interview with Barry Coburn, 9/16/97.
\95\ Staff interview with Barry Coburn, 9/16/97.
\96\ New York Times, 8/12/97.
\97\ Staff interview with Tyler Todd, 8/21/97.
\98\ Staff interview with Charles Surveyor, 8/21/97.
\99\ Newsday, 10/13/97.
\100\ Staff interview with Barry Coburn, 9/16/97.
\101\ Staff interview with Barry Coburn, 9/16/97.
\102\ Terence McAuliffe deposition, 9/18/97, p. 28.
\103\ Terence McAuliffe deposition, 9/18/97, p. 29.
\104\ Terence McAuliffe deposition, 9/18/97, p. 30.
\105\ Jason McIntosh deposition, 10/29/97, Exhibit 32: Cheyenne-
Arapaho Tribes of Oklahoma, press release, 6/28/96.
\106\ Staff interview with Barry Coburn, 9/16/97.
\107\ Jason McIntosh deposition, 10/29/97, p. 45.
\108\ Jason McIntosh deposition, 10/29/97, p. 48.
\109\ Jason McIntosh deposition, 10/29/97, p. 142.
\110\ Daily Oklahoman, 3/11/97.
\111\ Staff interview with Charles Surveyor, 8/22/97; Staff
interview with Tyler Todd, 8/21/97.
\112\ Staff interview with Tyler Todd, 8/21/97.
\113\ Daily Oklahoman, 3/11/97.
\114\ Daily Oklahoman, 3/11/97.
\115\ Cheyenne-Arapaho Tribes of Oklahoma, Working Session
transcript, 6/20/96, p. 18.
\116\ Cheyenne-Arapaho Tribes of Oklahoma, Working Session
transcript, 6/20/96, p. 29.
\117\ Cheyenne-Arapaho Tribes of Oklahoma, Working Session
transcript, 6/20/96, p. 41.
\118\ Cheyenne-Arapaho Tribes of Oklahoma, Working Session
transcript, 6/20/96, p. 42.
\119\ Cheyenne-Arapaho Tribes of Oklahoma, Working Session
transcript, 6/20/96, p. 43.
\120\ Cheyenne-Arapaho Tribes of Oklahoma, Working Session
transcript, 6/20/96, p. 43-44.
\121\ Cheyenne-Arapaho Tribes of Oklahoma, Working Session
transcript, 7/3/96, p. 15.
\122\ Cheyenne-Arapaho Tribes of Oklahoma, Working Session
transcript, 7/3/96, pp. 3-32.
\123\ Cheyenne-Arapaho Tribes of Oklahoma, Working Session
transcript, 7/3/96, p. 44.
\124\ Jason McIntosh deposition, 10/29/97, Exhibit 29: Cheyenne-
Arapaho Tribes of Oklahoma, Resolution No. 070996S167, 7/9/96.
\125\ Staff interview with Barry Coburn, 9/16/97.
\126\ Staff interview with Barry Coburn, 9/16/97.
\127\ Staff interview with Barry Coburn, 9/16/97.
\128\ Jason McIntosh deposition, 10/29/97, Exhibit 3.
\129\ Philadelphia Inquirer, 3/10/97.
\130\ Staff interview with Tyler Todd, 8/21/97.
\131\ Staff interview with Barry Coburn, 9/16/97.
\132\ Staff interview with Barry Coburn, 9/16/97.
\133\ Staff interview with Tyler Todd, 8/21/97.
\134\ Staff interview with Tyler Todd, 8/21/97.
\135\ Staff interview with Barry Coburn, 9/16/97.
\136\ Staff interview with Barry Coburn, 9/16/97.
\137\ Staff interview with Richard Grellner, 8/21/97.
\138\ Staff interview with Barry Coburn, 9/16/97.
\139\ Staff interview with Barry Coburn, 9/16/97.
\140\ Staff interview with Tyler Todd, 8/21/97.
\141\ Staff interview with Richard Grellner, 8/21/97.
\142\ Staff interview with Richard Grellner, 8/21/97.
\143\ Staff interview with Richard Grellner, 8/21/97.
\144\ Staff interview with Charles Surveyor, 8/21/97.
\145\ Staff interview with Richard Grellner, 8/21/97.
\146\ Staff interview with Richard Grellner, 8/21/97.
\147\ Staff interview with Richard Grellner, 8/21/97.
\148\ Staff interview with Richard Grellner, 8/21/97.
\149\ Staff interview with Richard Grellner, 8/21/97.
\150\ Staff interview with Richard Grellner, 8/21/97.
\151\ Staff interview with Richard Grellner, 8/21/97.
\152\ Staff interview with Barry Coburn, 9/16/97; Michael
Copperthite deposition, 9/3/97, p. 20.
\153\ Staff interview with Barry Coburn, 9/16/97.
\154\ Staff interview with Barry Coburn, 9/16/97.
\155\ Staff interview with Barry Coburn, 9/16/97; Federal Election
Commission records.
\156\ Staff interview with Barry Coburn, 9/16/97.
\157\ Nathan Landow deposition, 9/17/97, p. 19.
\158\ Nathan Landow deposition, 9/17/97, p. 20.
\159\ Nathan Landow, deposition, 9/17/97, p. 20.
\160\ Nathan Landow deposition, 9/17/97, Exhibit 4: Record of Phone
Message from Michael Copperthite to Nathan Landow, 11/15/96, NL 024.
\161\ Nathan Landow deposition, 9/17/97, p. 23; Nathan Landow
deposition, 9/17/97, Exhibit 4.
\162\ Staff interview with Barry Coburn, 9/16/97.
\163\ Michael Copperthite deposition, 8/27/97, p. 17.
\164\ Nathan Landow deposition, 9/17/97, p. 26.
\165\ Nathan Landow deposition, 9/17/97, p. 25.
\166\ Nathan Landow deposition, 9/17/97, pp. 25-26.
\167\ Nathan Landow deposition, 9/17/97, pp. 25-26.
\168\ Nathan Landow deposition, 9/17/97, p. 26.
\169\ Nathan Landow deposition, 9/17/97, pp. 38-39.
\170\ Philadelphia Inquirer, 3/10/97.
\171\ Nathan Landow deposition, 9/17/97, pp. 31-32.
\172\ Staff interview with Richard Grellner, 8/21/97.
\173\ Staff interview with Richard Grellner, 8/21/97.
\174\ Staff interview with Barry Coburn, 9/16/97.
\175\ Staff interview with Barry Coburn, 9/16/97.
\176\ Staff interview with Barry Coburn, 9/16/97.
\177\ Nathan Landow deposition, 9/17/97, p. 43.
\178\ Staff interview with Barry Coburn, 9/16/97.
\179\ Staff interview with Barry Coburn, 9/16/97.
\180\ Staff interview with Barry Coburn, 9/16/97.
\181\ Nathan Landow deposition, 9/17/97, p. 81.
\182\ Nathan Landow deposition, 9/17/97, p. 82.
\183\ Staff interview with Richard Grellner, 8/21/97.
\184\ Michael Copperthite deposition, 8/27/97, p. 52.
\185\ Michael Copperthite deposition, 8/27/97, p. 53.
\186\ Staff interview with Barry Coburn, 9/16/97.
\187\ Staff interview with Barry Coburn, 9/16/97.
\188\ Nathan Landow deposition, 9/17/97, p. 82-83.
\189\ Nathan Landow deposition, 9/17/97, p. 85.
\190\ Nathan Landow deposition, 9/17/97, p. 83.
\191\ Nathan Landow deposition, 9/17/97, p. 51-54.
\192\ Staff interview with Barry Coburn, 9/16/97.
\193\ Staff interview with Barry Coburn, 9/16/97.
\194\ Staff interview with Charles Surveyor, 8/21/97.
\195\ Nathan Landow deposition, 9/17/97, Exhibit 6.
\196\ Nathan Landow deposition, 9/17/97, p. 104.
\197\ Nathan Landow deposition, 9/17/97, p. 107-108.
\198\ Nathan Landow deposition, 9/17/97, p. 108.
\199\ Nathan Landow deposition, 9/17/97, p. 149-150.
\200\ Nathan Landow deposition, 9/17/97, p. 44-45.
\201\ Staff interview with Barry Coburn, 9/16/97.
\202\ Nathan Landow deposition, 9/17/97, p. 88.
\203\ Nathan Landow deposition, 9/17/97, Exhibit 11.
\204\ Nathan Landow deposition, 9/17/97, Exhibit 11.
\205\ Nathan Landow deposition, 9/17/97, Exhibit 11.
\206\ Nathan Landow deposition, 9/17/97, p. 141.
\207\ Nathan Landow deposition, 9/17/97, p. 140.
\208\ Peter Knight deposition, 9/17/97, p. 172.
\209\ Peter Knight deposition, 9/17/97, p. 183.
\210\ Peter Knight deposition, 9/17/97, p. 174.
\211\ Peter Knight deposition, 9/17/97, p. 176.
\212\ Peter Knight deposition, 9/17/97, p. 177.
\213\ Peter Knight deposition, 9/17/97, p. 181.
\214\ Peter Knight deposition, 9/17/97, p. 181; pp. 171-172.
\215\ Peter Knight deposition, 9/17/97, pp. 187-188.
\216\ Nathan Landow deposition, 9/17/97, Exhibit 8.
\217\ Staff interview with Barry Coburn, 9/16/97.
\218\ Cody Shearer deposition, 9/16/97, pp. 13-14.
\219\ Cody Shearer deposition, 9/16/97, p. 12.
\220\ Cody Shearer deposition, 9/16/97, p. 20-25.
\221\ Cody Shearer deposition, 9/16/97, p. 15.
\222\ Staff interview with Richard Grellner, 8/21/97.
\223\ Cody Shearer deposition, 9/16/97, p. 15.
\224\ Cody Shearer deposition, 9/16/97, p. 17.
\225\ Cody Shearer deposition, 9/16/97, p. 19.
\226\ Cody Shearer deposition, 9/16/97, p. 20.
\227\ Terry Lenzner, 7/31/97 Hrg., p. 51.
\228\ Terry Lenzner, 7/31/97 Hrg., p. 53.
\229\ Staff interview with Richard Grellner, 8/21/97.
\230\ Terry Lenzner, 7/31/97 Hrg., p. 55.
\231\ Staff interview with Richard Grellner, 8/21/97.
\232\ Terry Lenzner, 7/31/97 Hrg., p. 59.
\233\ Staff interview with Charles Surveyor, 8/21/97.
\234\ Staff interview with Richard Grellner, 8/21/97.
\235\ Staff interview with Richard Grellner, 8/21/97.
\236\ Staff interview with Richard Grellner, 8/21/97.
\237\ Terry Lenzner, 7/31/97 Hrg., p. 59.
\238\ Staff interview with Charles Surveyor, 8/21/97.
\239\ Staff interview with Charles Surveyor, 8/21/97.
\240\ Staff interview with Charles Surveyor, 8/21/97.
\241\ Staff interview with Charles Surveyor, 8/22/97.
\242\ Staff interview with Charles Surveyor, 8/21/97.
PART 7 INVESTIGATION PROCESSES
Chapter 38: Laying the Groundwork for the Investigation
FINDINGS
(1) The Committee's investigation was not bipartisan. The
Committee's investigation focused predominantly on persons and
entities associated with the Democratic Party. The Majority
devoted virtually no resources to exploring a variety of
serious allegations against those affiliated with the
Republican Party. Moreover, it refused to issue or enforce many
of the Minority-requested subpoenas related to the Committee's
mandate, simply because those subpoenas sought information from
Republican-related persons and entities. When the Minority
accumulated substantial evidence of Republican wrongdoing
despite these significant limitations, the Majority refused to
schedule hearings to allow for the public airing of this
information. As a result, virtually all of the Majority's
investigatory resources and Committee hearings focused upon
activities involving the Democratic Party and its associates.
(2) Although the Committee's investigation provided insight
on the serious shortcomings in our campaign finance system, the
failure to fully and impartially investigate wrongdoing in the
1996 federal elections, regardless of party, kept the Committee
from fulfilling its mandate and eliminated the ability to
produce a bipartisan report. The Committee's hearings did make
a contribution to the public's understanding of the ways in
which money influenced the 1996 elections. As a consequence of
the investigation's partisanship, the Committee cannot credibly
claim that it offered the American people a complete picture of
the illegal or improper activity that occurred during the 1996
federal elections. The Committee virtually ignored at least
half of the story of those elections, and the partisan
framework in which it presented and interpreted the evidence it
did uncover diminishes the Committee's ultimate findings and
conclusions.
INTRODUCTION
Shortly before the 1996 federal elections, several news
organizations reported that the Democratic National Committee
may have received illegal contributions of foreign money and
engaged in other fundraising improprieties. These reports
prompted the Senate early in the 105th Congress to order an
investigation into possible illegal and improper campaign
finance activities during the 1996 federal election cycle.
Responsibility for conducting the investigation was given to
the Senate Governmental Affairs Committee, which has the
broadest oversight jurisdiction of any Senate committee and a
long history of amicable working relationships between the
Majority and Minority membership.
The importance of this assignment cannot be overstated.
Clean and fair elections lie at the very heart of our
democratic system of government, and the American people are
entitled to know whether the electoral process was compromised
or corrupted during the 1996 election cycle. This was not only
an important assignment, it was an extremely delicate one: A
committee of the Senate would be investigating the process by
which the Senate's own members and the sitting President and
vice President had been elected. In addition, assurances from
the Chairman seemed to guarantee that the Committee would be
investigating allegations against both national parties and
their candidates.
In such circumstances, the temptation to use the Committee
for partisan purposes is enormous. There is, for example, the
risk that the Majority might use the vast powers of the
Committee to inflict damage on political opponents--while
shielding the Majority's own political allies. Although the
temptations are great, they are not irresistible. For example,
when a Senate Committee probed the Watergate affair, Chairman
Sam Ervin and the ranking Republican member Howard Baker,
worked as partners--preventing the investigation from becoming
overly partisan. The same was true of the Iran-Contra
investigation, which Senator Glenn, the Governmental Affairs
Committee Ranking Minority Member, hoped would be a model for
the investigation into campaign finance activities in 1997.
The Committee did not follow these models of
bipartisanship. The Majority focused almost exclusively on
Democratic-affiliated individuals and organizations, issuing
every subpoena that was proposed if it sought information about
Democratic activities but declining to approve dozens of
subpoenas seeking legitimate information about Republican
activities. There was an even greater imbalance in allocation
of hearing days: nearly 90 percent of the hearing days
addressed allegations of wrongdoing by Democrats. As a result,
the investigation soon lost credibility with the public, and
the country was denied the opportunity for a fair and balanced
look at the conduct of both Democrats and Republicans during
the 1996 election cycle.
The story of how the Committee was used for partisan
purposes is demonstrated by the Committee's choice of
procedures: the issuance and enforcement of subpoenas, the
selection and questioning of witnesses, and the allocation of
public hearing time. By examining these procedural choices, the
public may be able to understand how the Committee's
investigation into campaign finance activities failed to
fulfill its potential for informing the American people and
improving our democratic system.
INITIAL FLOOR STATEMENTS BY CHAIRMAN THOMPSON AND SENATOR GLENN
On January 28, 1997, Senator Fred Thompson, Chairman of the
Governmental Affairs Committee, spoke on the Senate floor to
outline his Committee's upcoming investigation into campaign
abuses and irregularities in the 1996 election
cycle.1 He laid out the parameters and principles by
which he envisioned the investigation would be conducted. The
Chairman discussed several general themes. First, he
anticipated using the forum of the investigation and its
hearings to advance the reform of campaign finance
laws.2 He also stated that ``those of us with
responsibilities in this area, whether it be the President or
members of Congress, cannot let the
call for reform serve to gloss over serious violations of
existing laws.'' 3
Second, Chairman Thompson proposed that the investigation
include an examination of improper activities--not just illegal
ones. While the Chairman viewed the scope of activities to be
investigated as those in the 1996 federal election cycle, he
stated that the Committee should also investigate ``facts that
may have occurred before the 1996 campaign that are relevant to
or shed light upon that campaign or the operation of our
government . . .'' 4 This statement suggested that
the Committee would conduct a meaningful investigation of the
fundraising activities of the Democratic National Committee and
the current President because those activities would be placed
in proper perspective by also investigating comparable
activities of the Republican National Committee and previous
administrations.
Chairman Thompson described the work of the Committee in
this way:
[I]t is an inquiry into illegal or improper campaign
finance activities in the 1996 Presidential campaign
and related activities. . . . Certainly, our work will
include any improper activities by Republicans,
Democrats, or other political partisans. It is of
extreme importance that our investigation and our
hearings be perceived by the American people as being
fair and evenhanded. . . . It simply means letting the
chips fall where they may. We are investigating
activities here, not political parties.5
The Chairman also indicated a desire to work with Senator
Glenn, the Committee's Ranking Democrat, and to seek consensus
on important issues. He stated:
We hope that in all cases the work of the Committee
can be done by the staff in a cooperative fashion.
Consensus should emerge on which issues are the most
serious and those matters which will receive the
greatest consideration. But if legitimate disagreement
arises as to priorities, the Majority will in no way
limit the Minority's rights to investigate any and all
parties within the jurisdiction of the Committee.
Moreover, the Minority will be given the opportunity to
call witnesses in for public hearings if we cannot
agree upon a joint witness list.6
Senator Glenn also spoke on the Senate floor on January 28,
1997. In response to Chairman Thompson's comments that the
Committee's investigation should be used to promote meaningful
campaign finance reform, Senator Glenn agreed that the hearings
were imperative for discovering problems and fixing the
laws.7 Recognizing that reform was unlikely until
public pressure becomes ``overwhelming,'' Senator Glenn
expressed hope that the hearings would provide impetus for such
change by stirring the necessary interest in the American
people.8
Senator Glenn also offered his views on how the Committee's
investigation should be conducted. He noted that bipartisanship
was crucial to a meaningful investigation and publicly pledged
support for Chairman Thompson's efforts to conduct such an
investigation.9 He also suggested that the Chairman
``establish objectives for the investigation without making the
inquiry too narrow and thereby risk[ing] at least a perceived
partisan approach.'' 10 Senator Glenn recommended
laying out certain binding ground rules pertaining to scope,
duration, process, and resource allocation 11 and
proposed that ``soft money,'' one of the most pervasive
problems in the campaign finance system, be a focus of the
investigation.12
Addressing the relationship between the Majority and the
Minority with respect to the investigation, Senator Glenn said,
``[T]o assure that the Committee's investigation is fair,
bipartisan, and legislatively productive, I think it is vital
[that] the Senate define the scope and procedures and duration
of the investigation in the omnibus committee funding
resolution.'' 13 He later described his specific
suggestions for ensuring a bipartisan investigation:
There should . . . be a specification of even-handed
procedural ground rules for the investigation. For
example, the majority and minority should have
contemporaneous access to all documentary evidence
received by the Committee. The majority and minority
should have the right to be present at and participate
equally in all depositions and investigatory
interviews. And the majority and minority should have
equal opportunity to obtain and present relevant
testimonial and documentary evidence on the subjects of
the committee's inquiry.
These are just safeguards for a fair and bipartisan
inquiry which is in keeping with contemporary Senate
practice. This is the way the last several Senate
investigations have been done, and Senate practice from
investigations of this kind dictate that it should be
expressly spelled out before the actual investigating
begins so we do not get into an unpleasant disagreement
in the middle of the hearings.14
These remarks, made by Chairman Thompson and Senator Glenn
on January 28, 1997, were in anticipation of the Committee's
first public meeting where the issues raised on the Senate
floor would be discussed and debated among Committee members.
ORGANIZATIONAL MEETING
On January 29 and 30, 1997, the Governmental Affairs
Committee held a two-day meeting to organize its activities for
the 105th Congress. The Committee's organizational meeting
focused on the Special Investigation and the members discussed
four issues relevant to that investigation: budget, scope,
procedures, and deadline.
A. Budget
On January 29, 1997, Chairman Thompson announced his
proposal to spend $6.5 million ``for a one-time non-recurring
budget for 1997 . . . for the investigation . . . into
foreigncampaign contributions and fund-raising activities emanating
from the 1996 Presidential campaign and related matters.''
15 Because the Majority had not, as required by Committee
rules,16 provided the Minority with advance notice of this
unprecedented budget request, Senator Glenn objected to approving the
budget on procedural grounds.17
Senator Glenn and the other Minority Members also objected
to Chairman Thompson's budget proposal on substantive grounds.
The request for $6.5 million to devote to the investigation was
$2 million more than the entire Committee's recurrent budget
that is provided for the Committee to carry out all of its
other functions in 1997.18 The Minority also noted
that the Chairman provided no justification for his sizable
request; although the request was far in excess of any other
initial request for a major Senate investigation, including the
Watergate and Whitewater investigations, even when inflation
was taken into account.19 And finally, the Democrats
noted that although the proposed budget was divided into line
items for salary, hearings, travel and equipment, no basis for
these figures was provided.20
During the second day of the organizational meeting, held
on January 30, 1997, Senator Glenn offered a substitute
amendment to the Committee funding resolution. Senator Glenn
proposed that instead of the $6.5 million budget requested by
the Chairman, that the Committee instead request $1.8 million
for one year.21 If the $1.8 million proved
insufficient, Senator Glenn suggested that the Committee could,
at the appropriate time, vote to authorize additional funds. In
response to this proposal, Senator Cochran stated that $1.8
million would only allow an investigation of a few months
duration.22 Senator Glenn then clarified his
suggestion by stating, ``What I am proposing is that we start
out with a reasonable amount of money, and I will be the first
to join my distinguished colleague from Mississippi in voting
for more money if we see that that is what is needed to
continue the investigation.'' 23 Chairman Thompson
stated that he believed Senator Glenn's proposal was
``inadequate'' 24 and that his $6.5 million figure
should be forwarded to the Rules Committee for approval. The
Chairman suggested that if any of the $6.5 million was not
expended during the investigation, those funds would be
returned to the United States Treasury. This suggested
procedure prompted Senator Glenn to note that the Committee
does not traditionally fund any project or federal program,
such as child care or the Head Start program, by providing more
funds than are justified and assuming that additional funds
will be returned. He explained that the Congress does not
stipulate that:
We will give you more money than you want, and if you
do not need it, turn it back. . . [I]n this Committee,
we have tried to get efficiencies of government, and we
do not normally put out more money than we know we need
for whatever the purpose is.25
Despite the agreement of most Members that each side should
produce specific information on their respective requests,
Chairman Thompson called for a vote.26 The Committee
defeated Senator Glenn's substitute amendment and passed
Chairman Thompson's proposal for $6.5 million to fund the
investigation along party lines.27
B. Scope
During its organizational meetings, the Committee also
discussed the appropriate scope of activities to investigate.
Here, the Committee members were able to find some common
ground.
All Members of the Committee agreed that the investigation
would include exploring any ``illegal or improper'' activities
of Democratic fundraising surrounding the 1996 Presidential
election. The Minority also sought to ensure that the Committee
had the opportunity to explore similar Republican fundraising
activities as well as allegations against Members of Congress--
such as improper access for contributors--and against previous
administrations in order to put current fundraising practices
in perspective.28 The Minority Members also stated
that the Committee should investigate allegations against
possible partisan activities of tax-exempt groups during the
1996 federal election cycle.29 As an example,
Senator Levin mentioned investigating a questionable ``issue
advocacy'' campaign conducted on behalf of the Republican Party
by Americans for Tax Reform (``ATR'') just before the 1996
election. ATR paid for this with a $4.6 million donation from
the Republican National Committee.30 See Chapter 11
of this Minority Report.
Chairman Thompson seemed to accept the Democratic proposal
31 and assured Committee Democrats that these areas
would be included, but he questioned how Democrats could on the
one hand want to expand the scope, but on the other want to
limit the budget.32 Committee Democrats responded
that they only sought to control the initial funding of the
investigation because it was dramatically higher than any
previous high-profile investigation since Watergate and that if
additional funds were needed to conduct a truly bipartisan
investigation, they would support such funding.33
During the discussion of the scope of the Committee's
investigation, Chairman Thompson stated that the scope could be
an informal understanding and that he would be willing to
broaden the investigation to encompass issues the Democrats
thought were important to investigate.34 Upon
Senator Lieberman's suggestion, however, the Committee agreed
to memorialize the scope of the investigation within the
authorizing resolution.35 Having agreed to commit
the scope of the investigation to writing, the Committee
Members met the next day to consider voting on a scope
document.
The next day, January 30, 1997, the Committee considered a
document establishing the scope of the investigation, drafted
jointly by the Majority and Minority staffs. The most
significant provisions in the scope document provided that the
Committee would investigate (1) all federal elections,
including both presidential and congressional races; (2)
improper as well as illegal campaign finance activities; and
(3) certain specified substantive areas. The Committee also
agreed that there would be leeway to look at matters that might
have occurred before the 1996 cycle.36
The Committee approved this scope proposal unanimously,
which called for aninvestigation of all improper or illegal
campaign finance activities, regardless of party
affiliation.37 Some Members cited the passage of the
Committee's scope proposal as an indication that the investigation
would be a bipartisan one, despite other disagreements.38
While this was an important first step, matters of procedures, budget,
and duration were left unresolved.
C. Process
During the January 29, 1997 organizational meeting, Senator
Lieberman raised the issue of procedural safeguards, suggesting
that the Committee agree to an internal process agreement that
would govern the operations of the Majority and Minority
staffs.39 Such an agreement would ensure that the
entire Committee had access to the same documents as well as
sufficient notice and opportunity to be present at all witness
interviews and depositions.
Chairman Thompson responded that if the Committee followed
its standing rules, that would be a starting point for fair
treatment. He also stated that the Majority would not take
advantage of the Minority and would do its best to ensure
bipartisan attendance at depositions as the Committee rules
provide.40 Chairman Thompson did not make the same
assurances with respect to Committee interviews except to state
that both staff should have ``equal access to [interview]
results, [and] that these things will be written up and made
available immediately to each side.'' 41 Lastly, the
Chairman chose to abide by the regular division of Committee
budgets in the Senate, providing two-thirds of any budgeted
funds to the Majority and one-third to the
Minority.42
When the meeting resumed the following day, January 30,
1997, there was some discussion about voting on an agreement
regarding investigative procedures, but the Committee decided
to allow staff to continue to work out several unresolved
matters such as bipartisan attendance at all
interviews.43 On this issue, Chairman Thompson
agreed ``to make a best-faith effort with regard to significant
interviews, and people are just going to have to show a little
. . . common sense and good faith as to what is significant.''
44 He also offered access to anything committed to
writing from an interview which the other side might have
missed.45 Senator Glenn suggested, and Chairman
Thompson agreed, to allow more time for consideration of a
process agreement. Chairman Thompson said: ``I think we are
making progress on it, and if there is a chance that we can
reach agreement on it, then I want to take that chance. So I
will agree to heed your suggestion on that, and let us not take
that up.'' 46 In the meantime Chairman Thompson
again offered that the Committee rules would serve as a good
basis for procedures to be followed.
D. Termination Date
The final area addressed at the meetings on January 29 and
30 was whether the investigation should have a fixed date upon
which it would terminate. Chairman Thompson was opposed to
setting a termination date, referring to a book about the Iran-
Contra investigation by former Senators George Mitchell and
William Cohen in which they recommended against an end date for
such a large-scale investigation.47 Senator Glenn
considered this a critical area for the structure of the
investigation to ensure against an ``open-ended inquiry.''
48 The Chairman again suggested that Majority and
Minority counsel and their staffs try to resolve some of these
procedural issues.49
first public debate on issuance of subpoenas
On February 7, Majority staff presented 31 document
subpoenas to the Minority staff for approval by Senator Glenn.
All but four of the subpoenas were for Democratic-related
entities or individuals.50 On February 10, the
Majority gave 25 more document subpoenas to the Minority,
making the subpoenas forwarded to the Minority within four days
total 56.51
Under Committee rules, the Ranking Member must be afforded
72 hours to consider the subpoenas and either approve or oppose
them.52 If the Ranking Member opposes them, the
Chairman may call a Committee meeting and put the subpoenas to
a Committee vote. If a Majority of the Committee members vote
for the subpoenas, they are issued. Concurrent with the
delivery of the proposed subpoenas, Chairman Thompson announced
a business meeting of the Committee to be held on February 13,
1997, at the end of the 72 hour period, anticipating Minority
objections to the subpoenas.
At the business meeting on February 13, Senator Glenn noted
his objections to the Majority's submission of the 56
subpoenas. First, he noted that all but four of the subpoenas
were for individuals and entities connected with Democratic
fundraising.53 Second, he objected to the fact that
the Minority was never consulted regarding the subject or the
substance of the subpoenas before they were submitted to the
Minority.54 Third, he explained that the sheer
number of subpoenas for review by the Minority at one time with
no notice was a monumental task. Fourth, Senator Glenn queried
why the Majority had provided no substantiation for the
subpoenas.55 And, finally, Senator Glenn stated that
these activities had been undertaken despite the fact that the
Committee did not yet have an approved budget or mandate.
Ultimately, Senator Glenn stated that he would give the
subpoenas fair consideration and asked only that the Minority
be given an adequate opportunity to review the proposed
subpoenas.56
Notwithstanding these objections, the Minority voted to
approve the issuance of 47 of the 56 subpoenas during the
February 13 Committee meeting in order to move the
investigation forward. The Committee approved the remaining
nine subpoenas over the Minority's objections, but agreed to
hold them for further discussion.57
alternative resolution, s. res. 61
On March 4, Senator Glenn introduced on the Senate floor S.
Res. 61, which was an alternative resolution for the
Committee's investigation. S. Res. 61 incorporated the scope
agreement unanimously voted on the Governmental Affairs
Committee, but also set forthprocedures to provide equal and
contemporaneous access to witnesses as well as documents, a proposed
budget of $1.8 million, and provisions for submission of a final report
no later than December 31, 1997, and consideration of the McCain-
Feingold legislation, S. 25, by May 1, 1997.58 This
alternative resolution was ultimately not adopted by the Senate.
rules committee appearances
At the beginning of each Congress, all Senate committee
chairmen and ranking members routinely appear before the Senate
Rules and Administration Committee (``Rules'') to present and
support the budget requests for their Committees. The Rules
Committee must then vote to authorize each Committee's budget.
Chairman Thompson and Senator Glenn appeared before the Rules
Committee on February 6 and March 6, 1997 to discuss the Senate
Governmental Affairs proposed budget, including its proposed
budget of $6.5 million to conduct an investigation into
campaign finance activities. Also before the Rules Committee
was the Governmental Affair's proposed scope of its
investigation, which was voted out unanimously by its Members
and which proposed an investigation of all ``improper and
illegal'' campaign activities during the 1996 federal election
cycle.59
During the February 6 Rules Committee meeting, Senator
Glenn stated that he opposed Chairman Thompson's budget of $6.5
million as ``excessive and unjustified,'' especially in light
of the many other campaign finance investigations occurring in
different parts of government.60 Additionally,
Senator Glenn noted that the Minority Members of the Rules
Committee also generally supported an incremental approach to
funding of the investigation.61 Chairman Thompson
argued that the Committee required $6.5 million for the
investigation, stating that the investigation would cover
numerous allegations of fundraising practices, as exposed in
the press.62 The Chairman also remarked that the
Committee would be exploring activities of an ``unprecedented
scope.'' 63 The Rules Committee adjourned without
resolving the issue.
On March 6, 1997, Chairman Thompson and Senator Glenn again
appeared before the Rules Committee to discuss the funding
resolution for the Governmental Affairs Committee's
investigation. During this meeting, Rules Committee Chairman
John Warner offered a resolution which proposed to decrease
Chairman Thompson's proposed budget of $6.5 million for the
investigation to a budget of $4.35 million.64
Chairman Warner's proposal also included provisions terminating
the investigation on December 31, 1997, with a final report due
on January 31, 1998, a month later.65 These
provisions represented an important effort at compromise.
Chairman Warner's provisions, however, proposed to alter the
scope of the investigation by eliminating allegations of
``improper activities,'' and leaving the Committee only able to
investigate ``illegal activities.'' 66 Both Senator
Glenn and Chairman Thompson opposed this narrow definition of
scope and maintained their support for the fuller scope which
had been unanimously approved by the Governmental Affairs
Committee.67
Senator Wendell Ford, Ranking Democrat on the Rules
Committee, also proposed a resolution during the Rules
Committee meeting. His proposal included the ``improper and
illegal'' scope language agreed to by the Governmental Affairs
Committee and was identical to Senator Glenn's resolution
introduced on March 4, S. Res. 61, except that it proposed an
increase in the investigation budget from $1.8 million to $3
million.68
After debate on the proposals, the Rules Committee passed
Chairman Warner's amendment and defeated Senator Ford's by a
party line vote.69 In taking this action, the Rules
Committee undid the unanimous decision of the Governmental
Affairs Committee to define the scope of its investigation to
include both improper and illegal activities. The Senate Rules
Committee's reversal of another standing committee's unanimous
scope decision was highly unusual.70
final floor debate
On March 10 and 11, 1997, the full Senate debated S. Res.
39, the resolution governing the Governmental Affairs Committee
investigation, as proposed by Chairman Warner and approved by
the Rules Committee.71 On March 11, after a
contentious floor debate in which Democrats argued vociferously
against narrowing the original scope of the investigation, the
full Senate considered and unanimously approved a compromise,
in the form of a substitute resolution offered by Majority
Leader Trent Lott.72 This resolution restored the
original scope unanimously approved by the Governmental Affairs
Committee to investigate ``illegal or improper'' activities in
connection with 1996 federal elections. It also reduced the
budget from Chairman Thompson's $6.5 million to $4.35 million,
and stipulated a termination date for the investigation of
December 31, 1997, with a reporting date of January 31,
1998.73
During the debate on the resolution, Democrats sought
specific assurances that Chairman Thompson intended to conduct
a bipartisan inquiry. Until the Chairman provided certain
assurances, several members were not prepared to agree to S.
Res. 39.74
Senator Glenn discussed the meaning of ``improper'' to
ensure that certain issues would not be precluded from inquiry.
Senator Thompson agreed to a broad interpretation of
``improper'' and committed to discussing with the Minority
whether an issue fell inside or outside the Committee's
scope.75
Senator Levin also engaged Chairman Thompson in a colloquy
on procedures. During this discussion, Chairman Thompson agreed
to conduct bipartisan depositions, joint investigative
interviews ``where feasible, . . . equal and contemporaneous
access to all documents . . . and . . . adequate notice of
filing these documents.'' 76 Senator Levin and
Chairman Thompson also agreed that an effort should be made to
work together on developing proposals for subpoenas instead of
presenting the Minority with a predetermined list of subpoenas
for issuance. Chairman Thompson acknowledged that the Committee
had ``got off on a bit of a wrong foot with regard to
subpoenas.'' 77 In addition to making specific
assurances about procedure, Chairman Thompson promised that
``we will have an opportunity for full discussion on any area
the Senator brings up.'' 78 He also offered to work
together with Democrats to set the agenda and priorities for
the investigation.
The procedures discussed on the Senate floor were never
finalized in writing, nor were many of them followed.
THE MAJORITY IMPEDED A FAIR INVESTIGATION
Despite earlier discussions of an internal process
agreement that would govern the procedures of the
investigation, as well as repeated requests and drafts
forwarded by the Minority, a formal process agreement was never
signed. The Minority, therefore, had to rely on informal,
unwritten assurances made by the Chairman during the
negotiation of the resolution. For the most part, the Majority
kept to its oral assurances that the Minority would have
contemporaneous access to documents, per a signed document
protocol, 79 and to witnesses for purposes of
deposition.80
However, there were serious problems with other Committee
procedures. Indicia of the partisan nature of the Committee's
investigation can be found in the Committee's treatment of
immunity requests, notice to staff of interviews, consideration
of subpoenas, and scheduling of public testimony.
A. Subpoenas
The procedures the Committee employed to draft, issue, and
enforce its investigation subpoenas was an unfortunate one that
may have a lasting and detrimental effort on future Senate
investigations.81 On January 28, 1997, when Chairman
Thompson addressed the Senate chambers, he referred to a 70-
year-old Supreme Court decision in which the Court held,
A legislative body cannot legislate wisely or
effectively in the absence of information respecting
the conditions which the legislation is intended to
affect or change; and where the legislative body does
not possess the requisite information--which not
infrequently is true--recourse must be had to others
who do possess it.82
By the end of the investigation, the Committee had issued
420 subpoenas for documents and testimony. Of the subpoenas,
328 were issued to obtain information about Democrats and
Democratic entities. When the Committee issued these subpoenas,
the Minority was often not provided its mandated 72 hour review
period. 83 Some were even served on the subpoenaed
parties before the Minority was informed that they had been
issued. These were unauthorized and invalid. The Committee's
procedures often deprived the Minority of the right to publicly
discuss subpoenas at a Committee meeting, much less to object
to them.
On the other hand, the Committee issued only 89 subpoenas
requested by the Minority--and over half of those were to
require deposition of individuals who would not cooperate with
the Committee. Of these 89 subpoenas, nearly half went ignored
by the recipient and unenforced by the Committee.
As detailed in Chapters 40 and 41 of this Minority Report,
numerous entities did not meaningfully respond to the
Committee's subpoenas. The Committee's failure to enforce its
subpoenas, particularly with respect to activities during the
1996 election, has created a precedent that may jeopardize the
Senate's future ability to obtain information necessary to
carry out its legislative responsibilities. By failing to
enforce those subpoenas, we relinquished one of the most
important tools available to us to govern: the ability to
compel testimony.
B. Consideration of Grants of Immunity
Under 18 U.S.C. Sec. 6005(b)(2), two-thirds of the
Committee must vote to immunize a witness against use of his or
her Committee testimony in future criminal proceedings. This
rule is intended to guard against grants of immunity that the
Committee might be tempted to consider in order to receive
colorful and sensational testimony, despite any negative impact
on important criminal prosecutions. The Committee rules
regarding the grant of immunity are intended to ensure that
this important power is shared by members of both parties.
On a few occasion, the Minority delayed proposed grants of
immunity in order to obtain more information about the
relevance of an individual's testimony, clearer proffers from
attorneys, and briefings from the Department of Justice as to
its view of the impact of granting immunity on its own parallel
investigation.84 Despite resistance from the
Majority, these steps seemed only prudent: Congress should
carefully consider whether its immunity grant may interfere
with or prevent a potentially important prosecution. The case
of Oliver North demonstrates that after an immunized witness
has testified publicly, it is difficult to uphold a
successfully prosecution of that witness for serious crimes.
The Minority also delayed a few proposed grants of immunity
for another purpose as well: to ensure the issuance of Minority
requested subpoenas. When immunity was requested in June, at
least a dozen subpoenas requested by the Minority had yet to be
issued or even voted upon by the full Committee--an opportunity
afforded all Majority requested subpoenas. In order to focus
the attention on these concerns, the Minority conditioned their
votes on immunity to satisfactory resolution of the long-
standing Minority-requested subpoenas. While the Minority was
partially successful--some of the bank subpoenas it had
requested were issued--many of its subpoena requests continued
to be ignored.
Ultimately, the Minority did join the Committee and vote in
favor of the majority of immunity proposals. Where the immunity
proposals were not granted, the Majority did not pursue
testimony from those witnesses.85
C. Interviews
Despite earlier assurances, the Majority staff conducted
several interviews withouteither prior, or subsequent, notice
to the Minority. This was particularly disturbing in light of
representation on the floor of the Senate and in public session that
the Chairman would make every accommodation to give the Minority the
opportunity to participate in ``significant interviews.'' 86
One interview that was conducted without notice to the
Minority bears special mention. On September 4, 1997 the
Minority heard from outside sources that Michael Mitoma, former
mayor of Carson, California, might be a hearing witness the
following day. At the time of this discovery, Mitoma--to the
Minority's knowledge--had been neither interviewed nor deposed
by the Committee. Upon inquiry to Majority staff, Minority
staff learned that Mitoma was in Washington, D.C. to appear
before the Committee and had recently been interviewed by
Majority staff.87 Only after this discovery did the
Minority staff have the opportunity to convince Mitoma that an
additional interview with both staffs was necessary.
Listed in an appendix to the Minority Report are other
interviews the Minority staff is aware were conducted by the
Majority without notice to the Minority.
D. Hearings
A final indicia of the Committee's partisan investigation
was the Committee's failure to provide to the Minority
reasonable notice of hearing witnesses or to schedule
reasonable hearings days for Minority witnesses.
During the March 11 meeting, Senators Glenn and Levin
raised the issue of notification of hearing topics and
witnesses. Senator Glenn said, ``Obviously we would like to
know as far in advance as possible what the subject of a
hearing is going to be so that we can prepare for it also,
right along with the Majority. . . . And . . . who the
witnesses are going to be . . .'' Chairman Thompson replied,
``I think we ought to give you as much as you feel like you
need that is reasonable to us. . . I think we could strive
toward a Wednesday notice'' for the following
week.88
In practice, the Majority consistently failed to provide
even 24 hour advance notice of hearing subjects and witnesses
to the Minority. On July 2, 1997, six days before the first
hearing day, the Majority did provide a list of potential
witnesses.89 The list, however, contained 30 names
of individuals who fell into several different categories, and
the Majority gave no indication of when it proposed to call
whom. At the time the list was issued, several of the listed
individuals had neither been deposed or even interviewed by the
Committee. During July, the Majority often provided less than
24 hours notice on who on the list would appear the next day.
By the end of July, the Majority had called 11 of the 30 listed
witnesses to testify before the Committee.90
When the hearings continued in the fall, this pattern
continued. The Minority was most often provided the names of
witnesses the night before they were to testify, and other
times was not provided with names until the morning the
testimony was to be taken. This notification was clearly
contrary to both Committee rules as well as to fair and
reasonable practice of conducting a Senate investigation.
The failure of the Majority to provide notice about its
public hearings was coupled with the failure of the Majority to
abide by Committee rules ensuring that the Minority be afforded
time to present its own witnesses and evidence. The Minority
attempted to bring balance to the investigation by calling
witnesses to explore Republican fundraising activities.
Although Chairman Thompson explicitly stated on numerous
occasions--beginning with his first public statement on January
28--that he intended to allow a fair inquiry into Republican
campaign activities,91 only three of the 31 hearing
days were devoted to investigating Republicans during the
entire course of the hearings. This represented less than 10
percent of the total hearing days.
This gross imbalance in hearing days was a matter of
serious contention. Time after time, promises were made that
the Minority would have an opportunity to put on evidence about
Republican campaign activities during the 1996 cycle. In
October 1997, an arrangement was reached to end the
investigative hearings and conduct three weeks of public policy
hearings on campaign finance reform. Under this arrangement,
the Minority agreed to temporarily relinquish its right to call
witnesses for three hearing days. However, Chairman Thompson
reserved the right to reopen the investigative hearings if
evidence arose to warrant such an action. If that were to
occur, the Committee agreed that the Minority's three hearing
days would be restored. After two weeks of hearings featuring
academics and activists on campaign finance reform, the
Majority exercised its option to resume its investigative
hearings but did not permit the Minority one, much less three,
days of hearings, despite the Committee's previous agreement.
No justification was ever provided.
CONCLUSION
Over the years, the Senate has used its authority to
conduct many significant investigations, often focusing on the
operations of governmental institutions or alleged wrongdoing
by specific individuals associated with the government. In
1997, the Senate authorized the Governmental Affairs Committee
to conduct such an investigation, investing it with a
significant opportunity to conduct a bipartisan inquiry into
campaign finance activities surrounding the 1996 federal
elections. Despite this opportunity, the Committee conducted a
narrow examination of the campaign finance system, focusing
primarily on selected activities of the Democratic Party.
Nonetheless, the Committee did examine, to varying degrees, the
two major political parties, a number of individuals involved
in campaign finance activities and the inner workings of our
electoral system. Although it was inherently a ``political''
investigation, it could have been conducted in a much less
partisan manner. As detailed above, the Minority lacked the
power to ensure that the Committee abided by certain procedural
safeguards. In the end, the Committee's choice of procedures
severely damaged the effectiveness of the investigation and may
have damaged the ability of the Committee to conduct future
investigations.
footnotes
\1\ Congressional Record, 1/28/97, p. S716-718.
\2\ Congressional Record, 1/28/97, p. 718 (Thompson).
\3\ Congressional Record, 1/28/97, p. S718 (Thompson).
\4\ Congressional Record, 1/28/97, p. S716 (Thompson).
\5\ Congressional Record, 1/28/97, p. S716 (Thompson).
\6\ Congressional Record, 1/28/97, p. S717 (Thompson).
\7\ Congressional Record, 1/28/97, p. S719 (Glenn).
\8\ Congressional Record, 1/28/97, p. S719 (Glenn).
\9\ Congressional Record, 1/28/97, pp. S718-719 (Glenn).
\10\ Congressional Record, 1/28/97, p. S718 (Glenn).
\11\ Congressional Record, 1/28/97, p. S719 (Glenn).
\12\ Congressional Record, 1/28/97, p. S718 (Glenn).
\13\ Congressional Record, 1/28/97, p. S719 (Glenn).
\14\ Congressional Record, 1/28/97, p. S719 (Glenn).
\15\ Governmental Affairs Committee, 1/29/97 Org. Mtg., p. 5:18-22.
The exact amount Chairman Thompson requested was $6,517,121.
\16\ Rule 5(C), ``Full Committee subpoenas.'' S. Prt. 105-05, Rules
of Procedure of the Committee on Governmental Affairs, United States
Senate, March 1997.
\17\ Governmental Affairs Committee, 1/29/97 Org. Mtg., p. 6:21-22
(Glenn).
\18\ Chairman Thompson requested $4,533,660 for the Committee's
annual recurring budget. Governmental Affairs Committee, 1/29/97 Org.
Mtg., p. 5.
\19\ Governmental Affairs Committee, 1/29/97 Org. Mtg., p. 71
(Glenn).
\20\ Draft United States Senate Committee on Rules and
Administration Senate Committee Budget Forms reported by Governmental
Affairs Committee listing requests for 1997 and 1998.
\21\ This amount equaled all of the money that the Chairman
investigating Whitewater received over a two-year period to conduct the
Whitewater investigation. Governmental Affairs Committee, 1/30/97 Org.
Mtg., pp. 22-23 (Glenn).
\22\ Governmental Affairs Committee, 1/30/97 Org. Mtg., p. 40
(Cochran).
\23\ Governmental Affairs Committee, 1/30/97 Org. Mtg., p. 42:19-23
(Glenn).
\24\ Governmental Affairs Committee, 1/30/97 Org. Mtg., p. 29
(Thompson).
\25\ Governmental Affairs Committee, 1/30/97 Org. Mtg., p. 42:11-18
(Glenn).
\26\ Governmental Affairs Committee, 1/30/97 Org. Mtg., p. 35
(Levin, Thompson), 37 (Specter).
\27\ Governmental Affairs Committee, 1/30/97 Org. Mtg., pp. 43-47.
\28\ Governmental Affairs Committee, 1/29/97 Org. Mtg., pp. 10-11
(Glenn), pp. 27-28 (Levin).
\29\ Governmental Affairs Committee, 1/29/97 Org. Mtg., p. 57
(Torricelli).
\30\ Governmental Affairs Committee, 1/29/97 Org. Mtg., p. 27
(Levin).
\31\ Governmental Affairs Committee, 1/29/97 Org. Mtg., p. 22
(Thompson).
\32\ Governmental Affairs Committee, 1/29/97 Org. Mtg., p. 72
(Thompson).
\33\ Whitewater: Comparisons of Cost and Other Selected Data with
Previous Investigations, CRS Report for Congress, 96-209 GOV, January
15, 1996. Governmental Affairs Committee, 1/30/97, Org. Mtg., p. 17
(Glenn).
\34\ Governmental Affairs Committee, 1/29/97 Org. Mtg., p. 21.
\35\ Governmental Affairs Committee, 1/29/97 Org. Mtg., pp. 34-35
(Lieberman).
\36\ Governmental Affairs Committee, 1/30/97 Org. Mtg., pp. 1-12.
These areas included: foreign contributions and their effect on the
American political system; conflicts of interest involving Federal
officeholders and employees, as well as the misuse of Government
offices; failure by Federal Government employees to maintain and
observe legal barriers between fund-raising and official business; the
independence of the Presidential campaigns from the political
activities pursued for their benefit by outside individuals or groups;
the misuse of charitable and tax-exempt organizations in connection
with political or fund-raising activities; unregulated (soft) money and
its effect on the American political system; promises and/or the
granting of special access in return for political contributions or
favors; the effect of independent expenditures (whether by
corporations, labor unions or others) upon our current campaign finance
system, and the question as to whether such expenditures are truly
independent; contributions to and expenditures by entities for the
benefit or in the interest of public officials; and to the extent that
they are similar or analogous, practices that occurred in previous
Federal campaigns.'' Governmental Affairs Committee, 1/30/97 Org. Mtg.,
pp. 5:10-6:5.
\37\ Governmental Affairs Committee, 1/30/97 Org. Mtg., p. 12.
\38\ Governmental Affairs Committee, 1/30/97 Org. Mtg., pp. 14-15
(Glenn), 32 (Levin), 35 (Nickles), 43 (Lieberman).
\39\ Governmental Affairs Committee, 1/29/97 Org. Mtg., pp. 35-36
(Lieberman).
\40\ Governmental Affairs Committee, 1/29/97 Org. Mtg., p. 48
(Thompson).
\41\ Governmental Affairs Committee, 1/29/97 Org. Mtg., p. 49:7-8
(Thompson).
\42\ Governmental Affairs Committee, 1/29/97 Org. Mtg., p. 47
(Thompson).
\43\ Governmental Affairs Committee, 1/30/97 Org. Mtg., p. 15
(Glenn).
\44\ Governmental Affairs Committee, 1/30/97 Org. Mtg., p. 13:13-17
(Thompson).
\45\ Governmental Affairs Committee, 1/30/97 Org. Mtg., p. 14
(Thompson). While the Minority is aware of several instances in which
unilateral interviews were conducted, no member of the Minority staff
received such a memo from any member of the Majority staff. The only
interview memoranda which were exchanged were drafted by FBI
investigators detailed to the Committee under a protocol that provided
for the sharing of all work product of such detailees.
\46\ Governmental Affairs Committee, 1/30/97 Org. Mtg., pp. 15:24-
16:2 (Thompson).
\47\ Governmental Affairs Committee, 1/29/97 Org. Mtg., p. 77
(Thompson).
\48\ Governmental Affairs Committee, 1/30/97 Org. Mtg., p. 18. See
also, 1/27/97 letter from Senator Glenn to Chairman Thompson.
\49\ Governmental Affairs Committee, 1/29/97 Org. Mtg., pp. 75-78.
\50\ Subpoena 000067 (RNC), 000069 (Dole for President). The other
two subpoenas went to a former Finance Chairman of the Dole for
President campaign, Simon Fireman, Subpoena 000032, and his company,
Aqua Leisure, Subpoena 000033. Fireman was convicted of laundering
political contributions through his business to the Dole campaign
Washington Post, 10/9/97.
\51\ Two subpoenas were eliminated from consideration which left a
total of 52 on the table. There was a duplicate subpoena going to the
Hsi Lai Buddhist Temple and the International Buddhist Progress
Society, both at the same address, and a subpoena to the Presidential
Legal Expense Trust which did not meet the Committee's 72-hour rule.
Governmental Affairs Committee, 2/13/97 Mtg., p. 30.
\52\ Rule 5(C), ``Full Committee subpoenas''; S. Prt. 105-05, Rules
of Procedure of the Committee on Governmental Affairs, United States
Senate, March 1997.
\53\ Governmental Affairs Committee, 2/13/97 Mtg., p. 2. Only
subpoenas to the Republican National Committee, Dole for President,
Simon Fireman and Aqua Leisure (Fireman's company) were served on
Republican entities or individuals.
\54\ Governmental Affairs Committee, 2/13/97 Mtg., pp. 1-7 (Glenn).
Majority staff did discuss problems with the subpoenas with Minority
staff after they were submitted to the Minority and even adopted some
of their changes.
\55\ In Senator Glenn's experience as a member on the Committee
with 22 years in the Senate, such subpoenas, regardless of their
numbers or origin, were always accompanied by supporting documentation,
whether or not from a public source. Governmental Affairs Committee, 2/
13/97 Hrg., p. 2 (Glenn).
\56\ Governmental Affairs Committee, 2/13/97 Mtg., p. 1.
\57\ Governmental Affairs Committee, 2/13/97 Mtg., pp. 30-39. The
first vote was on a group of 43 subpoenas unanimously approved for
service as soon as possible. The second group of nine subpoenas were
also approved, though only members of the Majority voted for them. It
was mutually agreed that the Majority would work with the Minority on
this second group to try to resolve any concerns the Minority had with
the language of the requests. Whether the concerns were resolved or
not, though, the subpoenas would be issued the following week.
\58\ Congressional Record, 3/4/97, pp. S1927-1928. In his statement
upon introduction of the resolution, Senator Glenn stated that its
purpose was to let ``. . . the public know precisely what Democrats
have been proposing for this investigation, and he emphasized the need
``. . . for a fair, bipartisan investigation. . . .'' Congressional
Record, 3/4/97, p. S1928 (Glenn).
\59\ On January 30, 1997, Chairman Thompson reported the original
resolution authorizing expenditures by the Committee on Governmental
Affairs. The resolution was referred to the Senate Committee on Rules
and Administration.
\60\ Senate Rules Committee, 2/6/97 Hrg., pp. 85-86 (Glenn) .
\61\ Senate Rules Committee, 2/6/97 Hrg., pp. 109-11 (Inouye); 118
(Feinstein); 128 (Torricelli); 150-151 (Ford).
\62\ Senate Rules Committee, 2/6/97 Hrg., p. 96 (Thompson).
\63\ Senate Rules Committee, 2/6/97 Hrg., p. 99 (Thompson).
\64\ Chairman Warner explained how he arrived at this figure: (1)
The FBI agreed to detail agents to the Committee to assist in the
investigation. Chairman Thompson estimated that this accounted for
$800,000 and, therefore, lowered his request to $5.7 million. (2)
Thompson's request was based on a budget for one year and since over
two months of the year had already passed, the budget was reduced on a
pro rated basis. Senate Rules Committee, 3/6/97 Hrg., p. 3 (Warner).
\65\ Senate Rules Committee, 3/6/97 Hrg., p. 4 (Warner).
\66\ Further provisions were made to refer only illegality found on
the part of a senator to the Senate Ethics Committee. A final section
provided that the Rules Committee would continue to hear matters
relating to campaign finance reform. Senate Rules Committee, 3/6/97
Hrg., pp. 4-5 (Warner).
\67\ Senate Rules Committee, 3/6/97 Hrg., pp. 25 (Glenn), 61-62
(Thompson).
\68\ Senate Rules Committee, 3/6/97 Hrg., p. 78 (Ford).
\69\ This included Senators Cochran, Stevens, and Nickles, members
of both Governmental Affairs and Rules, who were now casting their vote
for a resolution which would override their original vote on the
Governmental Affairs resolution. (Senator Stevens, along with Senator
Roth, left the Governmental Affairs Committee early in the
investigation and were replaced by Senators Bennett and Smith.)
Also, by voting for this resolution, Chairman Thompson finally
seemed to have succumbed to the idea of an end date for the
investigation once he received assurances that further funds would be
authorized if deemed appropriate:
I have resisted a cut-off date. But it is clear the members of
this Committee understand that we need to--I would love to finish by
the end of the year. . . . But if we do not, I think the Committee
understands and the Congress now understands that we will be right
back, and for good cause you will extend our time and our money. Am I
not correct? Senate Rules Committee, 3/6/97 Hrg., p. 64:5-13
(Thompson).
Chairman Thompson also confirmed that with the approval of his
Ranking Member, Senator Glenn, this investigation could be conducted
out of the Committee's recurring budget already approved by the Senate,
and the Rules Committee would have no say in the subjects or standards
of such investigation. Senate Rules Committee, 3/6/97 Hrg., p. 73
(Thompson).
\70\ Senate Rules Committee, 3/6/97 Hrg., pp. 6-7 (Ford).
\71\ Congressional Record, 3/10/97, pp. 2057-2078. In addition to
the debate being managed by Rules Committee Chairman Warner and
Governmental Affairs Committee Ranking Member Senator Glenn, Senators
Hatch, Wellstone, Cochran, Levin, Nickles and Feingold also made
statements on the Senate floor. Congressional Record, 3/10/97, pp.
2057-2078.
\72\ Congressional Record Vote No. 29, pp. S2124-2125. The vote
was 99-0; Senator Dodd, as immediate past General Chairman of the
Democratic National Committee, voted ``present''.
\73\ See S. Res. 39, 105th Cong., 1st Sess.
\74\ Congressional Record, 3/11/97, p. S2119 (Levin). Senator Levin
was prepared to offer an amendment on procedures but held a colloquy
with Chairman Thompson instead. Congressional Record, 3/11/97, pp.
S2119-2121.
\75\ Congressional Record, 3/11/97, pp. S2118-2119 (Glenn).
\76\ Congressional Record, 3/11/97, p. S2119-2121 (Thompson,
Levin).
\77\ Congressional Record, 3/11/97, p. S2118 (Thompson).
\78\ Congressional Record, 3/11/97, p. S2119 (Thompson).
\79\ United States Senate Governmental Affairs Committee Security
Procedures and Other Protocols, 4/1/97.
\80\ As far as the Minority knows, the Minority was given notice of
and participated in all depositions, though not always in a timely
manner. Approximately two-thirds of the way through the main
investigation, a Majority staff began to electronically mail the next
day's schedule to the entire investigation staff, both Majority and
Minority. Though this was an enormous help, it was often the first
notice the Minority received of a deposition or interview to be held
the following day.
\81\ These issues are discussed in more detail in Chapter 38,
``Republican Compliance Issues''.
\82\ Congressional Record, 1/28/97, S716 (Thompson) (quoting
McGrain v. Daugherty, 273 U.S. 135, 175 (1927)).
\83\ See Rule 5(C), ``Full Committee Subpoenas.''
\84\ Governmental Affairs Committee, 6/12/97 Mtg.
\85\ For example, on June 12, the Committee rejected grants of
immunity for 15 Hsi Lai Temple monastics, all proposed by the Majority.
Governmental Affairs Committee, 6/12/97 Mtg. By the time the Committee
reconsidered these requests, the Majority unilaterally reduced the
list. Governmental Affairs Committee, 6/27/97 Mtg.
\86\ Congressional Record, 3/11/97, p. S2120 (Thompson).
\87\ There was always an understanding that if it was not feasible
to advise the other side, the interview would go ahead. After the
public hearings had been concluded, Minority Counsel was advised that
Steve Young, son of Ambrous Young, was in town and available to meet at
Union Station late one evening. Minority Counsel conducted an informal
interview.
\88\ Governmental Affairs Committee, 6/27/97 Mtg., pp. 43-44. On
another occasion, Senator Glenn said, ``. . . (W)e would hope that we
would be able to be informed of what the subject of the hearing is and
the witness list at the same time that the hearing is called, a week in
advance. I think that is only fair, and it puts everybody on the same
footing.'' Chairman Thompson replied, ``We will do our best to do
that.'' Governmental Affairs Committee, 6/27/97 Mtg., p. 45:15-20.
\89\ 7/2/97 Memo from Majority Counsel to Minority Counsel with
attached ``Hearing Subpoena List''.
\90\ Richard Sullivan (July 9, 10); Juliana Utomo, Harold Arthur,
James Alexander (July 15); Gary Christopherson, Paul Buskirk, Jeffrey
Garten, Robert Gallagher, John Dickerson (July 16); Paula Green,
Timothy Hauser, William Ginsberg (July 17). In addition, three
witnesses were called who were not on the July 2 list: Thomas Hampson,
summary witness on the Lippo Group (July 15); William McNair, Central
Intelligence Agency (July 16); John Cobb, Counsel to Special
Investigation (July 17). Special Investigation Witness List, http://
www.senate.gov/gov__affairs/witness.htm.
\91\ Congressional Record, 1/28/97, p. S716 (Thompson).
PART 7 INVESTIGATION PROCESSES
Chapter 39: Democratic Compliance Issues
During its investigation, the Committee issued over 400
document and deposition subpoenas to a variety of organizations
and individuals. Of those subpoenas, 320 were issued at the
request of the Majority and sought information regarding
Democratic fundraising and political activities. Subpoenas were
issued to the White House, the Democratic National Committee
(``DNC''), the Clinton/Gore Campaign, a wide variety of
Executive Branch agencies, banks, private companies and
government and private individuals. Beginning in March 1997,
the Committee began to receive documents and depose
individuals. By the end of the investigation, the Committee had
received thousands of boxes of documents, deposed over 200
individuals, and taken 31 days of public testimony.
During the Committee's investigation, media reports
highlighted a number of problems the Committee encountered in
moving forward with its investigation. Although there were
problems with obtaining some information, the number of
documents produced to the Committee and the number of
individuals who voluntarily cooperated with the Committee
demonstrates that most organizations and individuals assisted
the Committee in conducting its investigation. As detailed in
Chapter 42 of the Minority Report, the White House produced
120,000 pages of documents 1 and provided, on a
voluntary basis, 40 former and current White House employees
for testimony.2 As detailed below, other Democratic
affiliated organizations, particularly the DNC, by and large,
cooperated fully with the Committee investigation. The DNC
produced over 450,000 pages of documents to the Committee and
provided former and current DNC officials who testified in
depositions lasting a total of 38 days.
---------------------------------------------------------------------------
Footnotes appear at end of chapter 39.
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Similarily, the number of documents produced by, and the
number of cooperative witnesses affiliated with, the Republican
Party is also testiment to that party's lack of cooperation
with the Committee. The numbers are telling. Entities
affiliated with the Republican party produced only a small
fraction of the documents produced by comparable Democratic
entities. For example, in response to similar documents
subpoenas, the DNC produced over 450,000 pages of unredacted
documents whereas the RNC produced 70,000 pages of documents--
20 percent of which were heavily redacted, without explanation.
The individuals associated with the two parties also responded
differently to requests for testimony. Former and current DNC
officials voluntarily agreed to depositions, providing over 38
days of depositions testimony to the Committee. Former and
current RNC officials, by contrast, did not agree to
depositions, insisting on Committee subpoenas before they would
cooperate. Ultimately, even when subpoenas were issued, those
RNC officials largely ignored them, ultimately providing only
two half days of deposition testimony to the Committee (see
Chapter 40).
This chapter discusses the DNC's cooperation and compliance
with the Committee's investigation. Chapter 40 discusses the
response of the RNC and other pro-Republican organizations to
the Committee's investigation. Chapter 41 details the breakdown
of compliance with the Committee's requests. Finally, Chapter
42 discusses the White House cooperation and compliance with
the Committee's requests.
FINDING
The DNC made a good faith effort to comply with Committee
requests. To this end, the Committee conducted 38 days of
depositions, 14 interviews, and five days of public hearings of
DNC witnesses. The DNC also produced over 450,000 pages of
documents and hired over 30 additional staff to review and
prepare documents for production to the Committee.
DNC COOPERATION AND COMPLIANCE
On April 9, 1997, the Committee issued a document subpoena
to the DNC requiring it to produce documents relevant to the
Committee's investigation. The Committee did not issue
depositions subpoenas for DNC testimony because all DNC
witnesses voluntarily appeared for deposition and public
testimony.
In response to the Committee's requests for documents and
testimony, the DNC expended significant time and resources,
reviewing over 9 million documents and providing 230 boxes of
documents--exceeding 450,000 pages--to the
Committee.3 In August 1997, to meet the demands
placed upon it by the Committee and other investigations, the
DNC doubled the number of employees dedicated to document
production and review from 17 to 34.4
By the end of the year, the DNC had incurred logistical,
technical, and staff costs of $4.75 million responding to
various investigations. That figure does not include legal
fees, which significantly increases the total expenditures made
by the DNC in response to Committee and other investigative
demands.5 In a July 17, 1997 letter to Chairman
Thompson, DNC Chairman Roy Romer concluded that the scope and
attendant cost of document production would rival or exceed the
costs associated with the largest civil cases in U.S. history,
``cases brought against huge corporations with thousands of
employees and resources vastly exceeding the limited funds of
the DNC.'' 6
Repeated requests to the Committee by the DNC to ``narrow''
the broad document subpoena, so that the DNC could best use its
limited resources to address the needs of the Committee, were
ignored.7 Nevertheless, the DNC appears to have made
efforts to adjust to the shifting deposition schedules,
document demands, and priorities of the Committee.
The DNC also made efforts to ensure that knowledgeable DNC
staff were available to the Committee. During the course of the
investigation, Committee staff conducted 38 days of depositions
and 14 interviews of current and former DNC staff, all of whom
appeared voluntarily, many more than once.8 Four
former/current DNC staff appeared as witnesses before the
Committee, testifying in five days of public
hearings.9 Despite the considerable efforts of the
DNC to cooperate with the Committee, the Majority continued to
complain publicly about DNC document production.10
In an August 28, 1997 deposition, Joseph Birkenstock, a DNC
attorney involved in the DNC production process, testified
about the DNC's efforts to comply with the Committee's document
subpoena.11 Regarding document production,
Birkenstock stated that he was instructed to carry it out as
expeditiously as possible, and there was no apparent deviation
from those instructions. Specifically, Birkenstock testified
that there was no DNC practice or policy to delay production of
documents for any reason, nor did the DNC establish different
document production priorities from those established by the
Committee. In addition, he stated that the political or legal
sensitivity of particular documents or categories of documents
was not a factor in determining when they would be produced to
the Committee.12
From March to November 1997, the DNC produced over 450,000
pages of unredacted documents to the Committee. During this
time period, issues arose concerning the assertion of the
attorney-client privilege in one DNC deposition and the DNC's
late production of files from Richard Sullivan's office and
those issues are addressed below.
Attorney-client privilege issue
On May 15, 1997, DNC General Counsel Joseph Sandler was
deposed by staff of the Committee. Sandler's attorney refused
to allow his client to testify about conversations with White
House and Democratic party officials, citing attorney-client
privilege.13 After the DNC submitted a written
explanation of the privilege,14 Majority counsel
called the White House and was informed that the White House
had not, and would not, assert any common interest (or joint
defense) privilege, even though such a privilege assertion
might be valid.15 The next day, on May 30, 1997,
Sandler appeared for another day of deposition testimony, and
the DNC informed the Committee that it would voluntarily be
waiving protections it could claim based on attorney-client
privilege with respect to communications with the White
House.16 Sandler answered all questions posed by the
Committee.
On June 6, a week after the DNC had officially waived the
privilege and answered questions in Sandler's second
deposition, Chairman Thompson issued an order regarding
Sandler's attorney-client privilege assertions. The order
essentially memorialized the position that the DNC had already
adopted. This order purported to ``overrule'' the ``common-
interest'' privilege--an assertion which had already been
rescinded by the DNC--while upholding other privilege
assertions that had been made.17
In a June 11 letter to Chairman Thompson, DNC Chairman
Romer noted that at the second day of Sandler's deposition on
May 30, the attorney-client privilege was not invoked in
response to any question. Romer opined that this simple fact
made the Order appear to be issued to gain partisan publicity.
Romer additionally noted that none of Sandler's notes or other
documents relating to discussions with any White House official
or employee were withheld on grounds of privilege or for any
other reason.18
Similarly, after the DNC attempted to establish a framework
that would permit future disputed documents to be reviewed in
camera by Committee counsels, Nonetheless, the Chairman issued
an order demanding that the DNC produce all documents for which
it was asserting a privilege for in camera review by Committee
counsels. In a September 2, 1997 response letter to Chairman
Thompson, DNC Chairman Romer explained that the DNC's assertion
of the attorney-client privilege as to certain documents
remained consistent with the terms of the Chairman's Order of
June 6.19
Late production of certain files
In August 1997, the Committee received 4,000 pages of
documents from the files of former DNC Finance Director Richard
Sullivan. This production included 1,500 pages of handwritten
notes. Apparently, these and other documents--totaling
approximately 12,000 pages--were not reviewed for production
until August, even though they apparently were in a file
cabinet in the office Sullivan occupied while finance
director.20 According to DNC Chairman Romer, this
oversight occurred because the documents were not among those
that Sullivan identified to the DNC as being his files, and the
files in question were believed to be ``generic'' Finance
Department or staff files. When they were determined to be
Sullivan's documents, Romer immediately personally informed
Chairman Thompson of their existence. Thereafter, the documents
were reviewed over a weekend by DNC staff and produced to the
Majority on August 4, in accordance with Romer's commitment to
Chairman Thompson.21
CONCLUSION
The Democratic National Committee has responded
appropriately to subpoenas issued by the Committee and to
requests for information and staff interview depositions and
public testimony. At great expense, the DNC has produced
hundreds of thousands pages of documents and made over 30
witnesses available for depositions and public testimony. These
numbers largely speak for themselves regarding the DNC's
cooperation with the Commitee's investigation, particularly
when compared to the RNC's production of a very small number of
unredacted documents and no cooperative witnesses. In sum,
there was no evidence presented to the Committee that the DNC
improperly withheld documents or witnesses during the course of
the Committee's investigation.
Footnotes
\1\ Lanny Breuer, 10/29/97 Hrg., p. 108.
\2\ Exhibit 2417M.
\3\ Letter from Chairman Thompson to DNC General Chairman Roy
Romer, 7/23/97; telephone conversation with Paul Palmer of Debevoise &
Plimpton, counsel to the DNC, 12/15/97; letter from Chairman Romer and
Steve Grossman, DNC National Chairman, to Chairman Thompson, 9/2/97;
telephone conversation with Paul Palmer of Debevoise & Plimpton,
counsel to the DNC, 1/7/98.
\4\ Letter from Roy Romer, DNC General Chairman and Steve Grossman,
DNC National Chairman, to Chairman Thompson, 9/2/97. The 34 staff
operate out of the Office of General Counsel (``OGC''). Joseph
Birkenstock deposition, 8/28/97, pp. 9-10.
\5\ Washington Post, 1/19/98.
\6\ Letter from Roy Romer, DNC General Chairman and Steve Grossman,
DNC National Chairman, to Chairman Thompson, 7/17/97.
\7\ Letter from Roy Romer to Chairman, 6/11/97; letter from Peter
Kadzik of Dickstein, Shapiro, Morin & Oshinsky, to Majority Counsel, 7/
29/97; letter from Roy Romer, DNC General Chairman and Steve Grossman,
DNC National Chairman, 9/2/97.
\8\ Minority document, ``Interviews and Depositions By Minority
Staff''; only one DNC individual required a subpoena for deposition
testimony--and that was only after he had already voluntarily provided
two full days of testimony.
\9\ See http://www.senate.gov/gov__affairs/witness.htm,
listing witnesses who publicly testified before the Committee.
\10\ Letter from Peter Kadzik of Dickstein, Shapiro, Morin &
Oshinsky, to Majority Cheif Counsel, 5/29/97; letter from Roy Romer,
DNC General Chairman and Steve Grossman, DNC National Chairman, 6/26/
97; letter from Robert Bauer and Marc Elias of Perkins Coie to
Chairman, 10/16/97; letter from Richard Ben-Veniste of Weil, Gotshal &
Manges to Chairman, 10/20/97.
\11\ Joseph Birkenstock deposition, 8/28/97, pp. 131-133.
\12\ Joseph Birkenstock deposition, 8/28/97, pp. 131-133.
\13\ Joseph E. Sandler deposition, 5/15/97, p. 174:18-21.
\14\ A legal research memorandum provided to the Committee on May
21, 1997, by DNC attorney Judah Best, concluded that disclosing
privileged information to a person with a common interest does not
waive the attorney-client privilege. Best asserted that ``under the law
of the District of Columbia, the exchange of privileged information
among lawyers representing separate clients and the disclosure of
privileged communications by one client to another's attorney does not
waive the attorney-client privilege where the clients have a common
interest and the communications relate to the matter of common
interest.'' Similarly, Best found that the privilege is not waived by
disclosure of confidential information between two clients represented
by a single attorney where the clients, at the time the information was
shared, had common interests. Judah Best Legal Opinion Memorandum, 5/
21/97.
\15\ Letter from Majority Counsel to White House Counsel Breuer, 5/
29/97; Letter from Breur to Majority Counsel, 6/2/97.
\16\ Joseph E. Sandler deposition, 5/30/97, pp. 63-64, 106-110.
\17\ The Order permitted, in part, the privilege to be asserted
with respect to the substance of certain conversations Sandler had with
DNC staff. Under the Order, such conversations would be privileged only
to the extent that they were for the specific and sole purpose of
Sandler's being able to render legal advice and if Sandler received or
provided the information with the clear expectation that the
information or advice would remain confidential. Similarily, the
assertion of attorney work product privilege with respect to any
conversation Sandler had in the period of September through November
1996, in the presence of any third party was overruled. Finally, the
DNC was ordered and directed to produce all documents in Sandler's
files including all his notes that were responsive to the subpoena and
a log of all documents in his files withheld from production on the
ground of privilege. Chairman's Order, 6/6/97.
\18\ Letter from Roy Romer to Chairman, 6/11/97.
\19\ Letter from Roy Romer to Chairman, 9/2/97.
\20\ Joseph Birkenstock deposition, 8/28/97, pp. 107-127.
\21\ Letter from Paul C. Palmer of Debevoise & Plimpton
representing the DNC to Majority Counsel, 8/4/97. This production
exemplifies the uneven treatment afforded by the Majority staff to the
Minority during this investigation. While the DNC produced these
documents to the Majority on August 4, despite repeated requests, the
Majority did not give the Minority a copy of the production for over
two weeks.
PART 7 INVESTIGATION PROCESSES
Chapter 40: Republican Compliance Issues
During its investigation, the Committee issued over 400
document and deposition subpoenas to a variety of organizations
and individuals. Of those subpoenas, 89 were issued at the
request of the Minority and sought documents and testimony
regarding Republican fundraising activities. Approximately half
of the 89 subpoenas sought documents from pro-Republican
organizations or from banks that possessed relevant
information. Unfortunately, the other half of the 89 were
deposition subpoenas issued to officials affiliated with the
Republican Party. The Committee was forced to issue these
deposition subpoenas because officials affiliated with the
Republican Party, unlike most officials affiliated with the
Democratic Party, see Chapters 39 and 42, refused to
voluntarily cooperate with the Committee's request for
deposition testimony. By the end of the investigation, although
the Committee had received hundreds of thousands of documents
and taken 240 depositions, the Committee received from these
Republican affiliated groups combined--including the RNC and
all pro-Republican groups subpoenaed by the Committee--less
than 100,000 pages of documents and only 36 depositions.
FINDINGS
(5) The RNC impeded the investigation. The RNC unilaterally
redacted documents and appears to have intentionally withheld
material documents. RNC witnesses failed to cooperate in
scheduling depositions, and, in the instances where depositions
were scheduled, they were unilaterally canceled.
(6) Entities supportive of the Republican party impeded the
investigation. Entities including the National Policy Forum,
Americans for Tax Reform, and Triad intentionally impeded the
investigation by failing to produce documents and witnesses
under subpoena.
INTRODUCTION .
On April 9, 1997, the Committee issued document subpoenas
to several organizations associated with the Republican Party,
including the Republican National Committee (RNC), the National
Policy Forum, Americans for Tax Reform, and Triad Management
Services, Inc. (Triad). Beginning late April 1997, the entities
made clear to the Committee that they would resist the
Committee's subpoenas and other requests for information. For
example, although the DNC began its documents production in
March 1997, even before it received a Committee subpoena, the
RNC did not make a meaningful production to the Committee until
late June 1997. In addition, despite the fact that the RNC and
DNC received similar subpoenas on April 9, the RNC produced
only 70,000 pages of redacted documents, compared to the DNC's
production of over 450,000 unredacted documents. The other
Republican-affiliated groups subpoenaed in April provided less
information to the Committee than the RNC. Some of the groups
even claimed that the Committee subpoena was ``not applicable''
to their organizations.
Beginning in the spring of 1997, the Minority urged
Chairman Thompson to enforce the subpoenas against these
entities. Although Chairman Thompson ultimately issued an order
of compliance in July 1997 to the National Policy Forum, that
organization flagrantly ignored the order and refused to
comply. This defiance sent an unfortunate message to other
Republican affiliated groups, and perhaps even groups that were
later subpoenaed by the Committee, that the subpoenas could be
ignored with no consequences.
In fact, after the Committee later issued additional
subpoenas to 26 organizations, many of those organizations on
both sides of the political aisle ultimately banded together
and did no respond to the Committee mandate. See Chapter 41.
This issue turned the Senate investigative process into a
``paper tiger.'' The enforcement power of the Committee, and of
the Senate, could have been preserved had the Majority acted
decisively against those organizations--most of them
Republican--that first challenged the Committee's authority in
the spring of 1997. The groups discussed in this chapter were
all subpoenaed in early April, which was near the beginning of
the investigation so that ``running the clock'' on the
investigation was not an issue. Moreover, Senator Glenn and
other Democrats publicly stressed on numerous occasions their
willingness to vote contempt against any entity that refused to
comply with a valid Senate subpoena.
THE FIRST SUBPOENAS
On April 9, 1997, the Committee issued subpoenas to the
Republican National Committee (``RNC''), Dole for President,
Triad and its affiliates, Coalition for Our Children's Future,
the National Policy Forum (``NPF'') and Americans for Tax
Reform (``ATR''). The return date for these subpoenas was April
30. In order to understand the extent to which the
investigation deteriorated, it is important to fully review the
context of the events as they unfolded. By the middle of June--
just three weeks before the hearings were scheduled to begin--
the production of documents by most of the Republican-
affiliated organizations under subpoena remained woefully
incomplete, and in some cases, non-existent:
By April 30, the Republican National Committee had
produced only an internal telephone directory and some
organizational charts. By June 10, the RNC had provided only
four boxes of heavily redacted documents. The Minority
estimates that on this date, it received 15,000 documents, 20
percent of which had been redacted and another 20 percent
consisting of publicly available information. This record was
in sharp contrast to the DNC, which by this date had produced
61 boxes containing over 150,000 pages of unredacted documents.
During the course of the investigation, Dole for
President provided the Committee with only three boxes of
material. In contrast, Clinton/Gore produced five boxes
containing 11,930 pages of material.
Triad and its affiliates provided one box of
documents by June 10, the majority of which, it appeared, were
provided by Triad's affiliates. It is noteworthy that Carolyn
Malenick, Triad's president, had a company policy that required
the ``cleaning'' of Triad's computer files on a regular
basis.1
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Footnotes appear at end of chapter 40.
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Americans for Tax Reform adopted the unsupportable
position that since it played no role in the 1996 election, the
subpoena was not applicable.2 By June 10, it had
produced no documents.
The National Policy Forum, represented by the same
lawyer as ATR, also took the position that since, in its view,
it played no role in the 1996 election, the subpoena was not
applicable. On June 6, NPF did provide the Committee with some
documents, which were simultaneously provided to the news
media. NPF expressly stated that this production did not
constitute compliance with the Committee's
subpoena.3
These organizations together--the RNC and all
Republican groups combined--only provided 36 days of deposition
testimony, with many individuals refusing to appear or answer
questions before and after the Committee had issued deposition
subpoenas demanding their appearance. The Committee took a
total of 240 depositions during its investigation.
Below is a discussion of the cooperation and compliance of
the RNC, Triad, NPF and ATR in response to the Committee's
investigation.
RNC COMPLIANCE ISSUES
The RNC's initial response to the Committee's April 9, 1997
subpoena was to produce only an internal telephone book.
Finally, on May 23, the RNC began to produce documents.
Unfortunately, as Chairman Thompson wrote to RNC Chairman Jim
Nicholson on June 11, ``the RNC . . . in many cases . . .
unnecessarily redacted the documents produced.'' 4
To date, the RNC has offered no explanation for any of the
redactions to several thousand documents.
The RNC also failed to produce a number of inculpatory
subpoenaed documents. The Committee's document subpoena asked
the RNC to produce, among other things:
All documents referring or relating to the following,
including but not limited to communications between the
RNC and officers, agents, or employees of any of the
following: . . . (21) American Defense Institute and
Foundation, . . . (23) National Right to Life
Committee; . . . (26) Americans for Tax Reform; . . .
(28) Grover Norquist.5
On October 17, the Dole for President committee produced a
number of documents that had been stored in the computer hard
drive of Jo-Anne Coe, who served as RNC deputy finance director
in 1996. One of those documents was an October 17, 1996, memo
from Coe to RNC Chairman Haley Barbour, RNC Executive Director
Sanford McAllister, and RNCDirector of Campaign Operations Curt
Anderson. In this document, Coe wrote:
Today I have also sent $100,000 to National Right to
Life and $100,000 to Americans for Tax Reform--both
from Carl Lindner. In addition, the following checks
for ADI are en route to me: $100,000 [from] Jack
Taylor, $100,000 [from] Max Fisher, $50,000 [from] Don
Rumsfeld, $30,000 [from] Pat Rutherford. The $100,000
check from Lincy Foundation (Kirk Kerkorian) for ADI is
still MIA. With the $100,000 from Lincy, this will
bring the total for ADI to $510,000--plus the $500,000
Haley obtained from Philip Morris.6
This document refers to Americans for Tax Reform, the National
Right to Life Committee, and the American Defense Institute--
three organizations specifically mentioned in the Committee's
subpoena. Considering that the document was stored in the hard
drive of the RNC's deputy finance director and addressed to
three top RNC officials, the failure of the RNC to produce it
raises a compelling inference that the RNC willfully withheld
material evidence which had been subpoenaed.
Coe's hard drive contained a number of other responsive
documents that the RNC failed to produce. One example is the
text of an October 21, 1996 letter from Coe to ATR President
Grover Norquist. The letter asked Norquist to write a thank-you
note to Carl Lindner, who had, at the RNC's request, written a
$100,000 check to ATR.7 Coe also wrote a letter to
the executive director of the National Right to Life Committee,
asking that he also send a thank-you note to Lindner for a
$100,000 contribution that the RNC had engineered. 8
Another responsive document contained in Coe's hard drive
listed the amounts of money the RNC directly controlled and
contributed to the American Defense Institute, National Right
to Life Committee, and Americans for Tax Reform.9
Every single one of these documents is responsive to the
Committee's subpoena. Yet, the RNC failed to produce any of
these documents, and has refused to explain its failure to
comply with the Committee's document subpoena. Whoever was
responsible for this declaration on the part of the RNC should,
in the view of the Minority, be investigated for possible
obstruction of justice.
The RNC's record of making witnesses available for
interview or deposition was another indication of the
organization's planned activity to impede the Committee's
investigation. On April 28, the Minority provided the RNC with
a list of 16 individuals the Minority wished to interview. The
RNC stated numerous times to Commitee staff that each of these
witnesses would appear voluntarily for interviews.10
Unfortunately, despite repeated attempts to schedule these 16
interviews, only five ultimately agreed to talk to Committee
staff.
Majority and Minority Chief Counsels requested in a joint
letter to the RNC that it promptly schedule depositions for 15
witnesses. The letter told the RNC that ``[i]f a schedule
cannot be worked out between you and counsel for the Committee
by August 12, 1997, the Committee will find it necessary to
subpoena [these] individuals.'' 11 The RNC assured
the Committee that all of these witnesses would appear
voluntarily for depositions by the end of October.12
Despite these assurances, and again despite repeated attempts
to schedule deposition dates, the RNC did not allow the
Committee to depose a single one of these witnesses.
The refusal of RNC witnesses to appear voluntarily for
depositions prompted the Committee to issue deposition
subpoenas for Dole for President Campaign Manager Scott Reed
and RNC Deputy Finance Director Coe, both of whom were
represented by RNC counsel Martin Weinstein.13 The
subpoenas were served on September 19, 1997. RNC counsel
earnestly assured the Committee that it would comply with the
Committee's subpoenas, and then cancelled several deposition
dates. Ultimately, in October, the RNC informed the Committee
that Coe and Reed would in fact not appear for depositions or
otherwise comply with the Committee's subpoena.14
Coe and Reed asserted no legal basis to explain their refusal,
nor did they challenge the validity of the Committee's
subpoenas. In stark contrast to the DNC officials who all
voluntarily appeared for depositions, these RNC officials
simply refused to respond to the Committee's requests for
information and, when subpoenas were finally issued to require
them to cooperate, they proceeded to ignore the Committee's
mandate.
TRIAD COMPLIANCE ISSUES
The subpoenas issued to Triad Management Services, Inc.
(Triad), a for-profit company, and its affiliates, Citizens for
Reform (``CFR'') and Citizens for the Republic Education Fund
(``CREF''), called for the production of documents under a
total of 56 separate paragraphs.15 Although the
return date for the production of documents was April 30, Triad
did not begin to make any significant production until early
June. Ultimately, Triad produced no more than a few hundred
documents. In fact, Triad's affiliate organizations, discussed
below, provided the Committee with more documents than did
Triad itself and provided several documents that originated at
Triad, but were not produced by Triad. Several of the documents
strongly suggest that Triad withheld responsive documents from
the Committee. One possible, albeit extremely troubling,
explanation may be that Triad destroyed documents in
anticipation of the Committee's subpoena. Triad produced a
memorandum dated February 20, 1997, in which Triad's president,
Carolyn Malenick, informed employees of the company's
``cleaning of the computers.'' 16
Triad, through its lawyer, Mark Braden, maintained that it
provided the Committee with all documents called for under the
subpoena. Although the Minority cannot prove that any documents
were either intentionally destroyed or withheld, the Minority
believes it is likely that additional responsive documents
exist which have not been produced. For instance, there was
incomplete information about advertising planned, produced, or
paid for by Triad, CFR, and CREF. There were no scripts or
invoices for ads produced by CREF. There were no internal
memoranda from CREF such as communication between vendors and
the CREF's chairman, Lyn Nofziger. Curiously, there was no
application for tax-exempt status produced by CREF, even though
its attorney claimed it was a 501(c)(4).
Another example of a document that may have been withheld
was a ``fee schedule'' which was referred to in the deposition
of Meredith O'Rourke, Triad's finance director,17
and which should have been produced under paragraph 10 of the
subpoena.18 Additionally, it is clear from Triad's
marketing video that company officials met with elected
officials to plan strategy and fundraising. Yet, Triad produced
no information about any meetings at which elected officials to
federal office were present.
The Minority was interested in exploring the issue of
document production with several Triad witnesses but, with a
few exceptions, the witnesses were extremely uncooperative. For
example, Carolyn Malenick, Triad's president, Lyn Nofziger,
Citizens for the Republic chairman, and Carlos Rodriquez,
Triad's campaign consultant, were all subpoenaed for deposition
testimony.19 Initially, they all ignored their
respective dates for deposition and failed to appear. After the
Minority requested that the Chairman hold them in contempt,
they each appeared, but refused to answer
questions.20 Other witnesses critical to the Triad
story, including Mark Braden, David Gilliard, Kathleen McCann,
Richard Dresner, and James Farwell were under subpoena, but
failed to appear for their depositions.21 Peter
Flaherty, the Chairman of Citizens for Reform, did appear for
his deposition, but chose to adopt an openly hostile attitude
by frequently answering questions ``None of your business.''
22
On July 3, 1997, five days before the hearings began,
Chairman Thompson wrote a letter to Jim Nicholson, chairman of
the Republican National Committee, in which he warned the RNC
against ``shielding'' witnesses and failing to produce
documents. 23 More importantly, on that same day,
the Chairman issued an Order to the National Policy Forum to
produce documents.24
THE NPF ORDER
An order is essentially a command by the Chairman that the
individual or entity must comply with the Committee's requests
and demands or face the legal consequences--presumably
contempt. The Chairman had previously issued an order to the
DNC with which the DNC complied. The National Policy Forum, on
the other hand, completely ignored the order. In fact, the
NPF's lawyer, Thomas Wilson, responded in a letter to the
Majority Chief Counsel that ``The Committee's subpoena cannot
change the limits of the Committee's jurisdiction; neither can
a letter purporting to be an order issued by the Committee's
Chairman.'' 25
Wilson's defiance of the order was a decisive moment in the
investigation. A subpoena to the AFL-CIO had only been issued a
few weeks before and the scope of that subpoena was still being
negotiated. Other organizations, such as the RNC, were clearly
in violation of their subpoenas, but only the NPF was under an
order.
Regrettably, after Wilson's letter, the Chairman took no
action. The Minority was forced to conduct its three days of
hearings on NPF without ever having that organization even
partially comply with the subpoena. More importantly, the NPF
episode likely sent asignal to other organizations that the
chairman would not exercise the contempt option and that the
Committee's processes, particularly when directed at Republican
entities or individuals, could be ignored with impunity. As a result,
most of the Republican-affiliated organizations under subpoena
abandoned any pretense of cooperation with the Committee's inquiry.
npf compliance issues
The subpoena issued to the National Policy Forum on April
9, 1997 called for the production of documents under 27
separate paragraphs.\26\ After several delays, NPF provided a
limited number of documents on June 6, 1997. Many of the
materials had already been provided voluntarily to the
Committee by the attorney for Young Brothers Development (USA)
and most were also provided by the NPF to members of the media
at the same time they were delivered to the Committee. The next
limited production from NPF came on June 30. Accompanying the
documents was a transmittal letter that stated:
Nevertheless, in the same spirit of cooperation that
motivated the Forum to provide voluntarily to the
Committee documents regarding the Signet Bank loan
transaction on June 6, 1997, the Forum is today
voluntarily providing 30 boxes of additional materials.
These materials--like the loan materials--are not
responsive to the Committee's subpoena. They have
nothing to do with the 1996 Federal election campaigns
and the Forum has no obligation to produce them. The
Forum, however, has decided voluntarily to provide the
Committee with materials that will give the Committee a
better understanding of the Forum's purposes and
activities.\27\
Due to its position that it was not producing documents
pursuant to subpoena, NPF failed to categorize or relate the
documents it provided to specific paragraphs of the subpoena,
or to make any representation as to whether there were certain
paragraphs of the subpoena for which it had no responsive
documents. As noted in Chapter 3 on NPF, because the Committee
received important and responsive documents from other sources
and it became clear that NPF was willfully withholding
documents. As noted above, Chairman Thompson issued an order on
July 3, 1997, that stated, ``The National Policy Forum is
ORDERED and DIRECTED to produce all documents in its files that
are responsive to the NPF subpoena . . . by 9 a.m. on Monday,
July 14, to Committee staff. . . .'' \28\ Not only did NPF's
counsel ignore the July 14 deadline, but on July 15, he
responded by providing a limited number of additional documents
along with a letter stating: ``As with the June 30 production,
the Forum has not provided these materials in response to the
Committee's subpoena or because it is obligated to do so.''
\29\
NPF also ignored paragraph (2) of the subpoena, which
requested ``All documents referring or relating to NPF
obtaining or maintaining tax-exempt status.'' \30\
A letter to NPF (and RNC) Chairman Haley Barbour from
former NPF President Michael Baroody, in which Baroody
expressed concern that NPF could be endangering its tax exempt
status was never provided to the Committee by NPF, in direct
contravention of paragraph (2) of the subpoena and of the
Chairman's order.\31\ In addition, NPF further obstructed the
Committee's investigation by refusing to turn over other
documents responsive to paragraph (2) of the subpoena until its
July 15 ``voluntary'' production, when it finally turned over
one Internal Revenue Service (``IRS'') document denying NPF's
tax-exempt status.\32\
NPF ignored paragraph (20) of the subpoena, which
requested:
All documents referring or relating to, or containing
information about, any conferences, receptions,
briefings, or meetings organized by, or through, NPF at
which any official elected to federal office and any
donor to NPF were present.\33\
NPF violated paragraph (20) of the subpoena by failing to
provide at least two documents that were ultimately provided to
the Committee by other sources. One was a memo to Haley Barbour
from NPF fundraiser Grace Wiegers regarding ``Recruiting
Members of Congress to Raise Money for NPF.'' \34\ The second
was a memorandum to NPF President John Bolton from Grace
Wiegers and Dianne Harrison regarding ``Megaconference
Sponsorship.'' \35\ Both are fundraising memos which anticipate
NPF donors meeting with elected officials. (Appearances by
elected officials were a feature of NPF megaconferences.)
NPF ignored paragraph (23) of the subpoena, which
requested:
All documents referring or relating to, or containing
information about, communications by any director,
officer, employee, or agent of NPF and any director,
officer, employee or agent of a registered political
committee, including, but not limited to, a national
party committee.\36\
NPF violated paragraph (23) by withholding from the
Committee a memorandum from RNC official Scott Reed to NPF
officials Haley Barbour, Michael Baroody, and Kenneth Hill.\37\
The Committee received this document from another source.
In addition to withholding documents in defiance of the
Committee's subpoena and Chairman Thompson's order, NPF's
attorney, Thomas Wilson, may have obstructed the Committee's
investigation by making false statements to the Committee.
Wilson repeatedly claimed that NPF was not required to comply
with the subpoena because ``the Forum had nothing to do with
the 1996 Federal election campaigns, or any other election
campaigns.'' \38\ In hearings on NPF, the Committee established
that NPF was nothing more than a front for the Republican
National Committee, that foreign money was funneled from the
NPF to the RNC, and that the money was ultimately used in
federal and state elections in 1994 and 1996.\39\ In addition,
the Internal Revenue Service denied tax-exempt status to NPF on
the ground that the group engaged in partisan political
activity.\40\ Wilson knew or should have known of the election
activity engaged in by his client, and he willfully misled the
Committee.
It is clear that NPF refused to comply with the Committee's
subpoena and order, and that its agent misled the Committee by
making a false statement of material fact. What is unclear is
how many other responsive documents NPF failed to produce that
the Committee was unable to acquire through other sources.
NPF's actions were taken knowingly and willfully, and as such
constitute an obstruction of the Committee's investigation.
atr compliance issues
The subpoena issued to Americans for Tax Reform on April 9
called for the production of documents under 29 separate
paragraphs.\41\ After several delays, ATR provided certain
documents to the Committee on June 11, 1997. The transmittal
letter accompanying these documents, however, stated:
ATR makes the production of the documents which
accompany this transmittal letter voluntarily and
purely as a matter of grace, not because ATR believes
that any of the documents produced are called for by
the subpoena, when that subpoena is read in conjunction
with the jurisdictional limitations placed upon the
Committee's investigation by S. 39 [sic--S. Res.
39].\42\
ATR also stated in its letter that ``ATR has virtually no
documents that relate to the 1996 Federal election campaign,
and, we believe, no documents at all that relate to ``illegal
or improper activities in connection with 1996 Federal election
campaigns'. . .'' \43\
Due to its position that it was not producing documents
pursuant to a subpoena, ATR--like NPF--failed to categorize or
relate the documents it provided to specific paragraphs of the
subpoena, or to make any representation as to whether there
were certain paragraphs of the subpoena for which it had no
responsive documents. As a result, it was difficult at first
for the Committee to know in certain instances whether ATR was
willfully withholding responsive documents or whether it merely
had no such responsive documents. In a letter to ATR dated
August 15, 1997, and signed jointly by Majority and Minority
Chief Counsels, the Committee identified 12 specific paragraphs
for which it determined ATR failed to produce documents and
asked ATR to provide the Committee with an affidavit stating
whether ATR had withheld any documents responsive to these or
any other specifications of the subpoena.\44\ ATR's affidavit
failed to provide such a statement; rather, it merely
reiterated the positions taken by ATR in its original
transmittal letter.\45\
Among the subpoena requests identified in the Committee's
August 15 letter were paragraphs 9 and 25 which read as
follows:
All documents referring or relating to, or containing
information about, any contribution, donation,
transfer, loan, or grant, or funds or services, made to
ATR from any registered political committee.\46\
* * * * *
All documents referring or relating to, or containing
information about, communications by any director,
officer, employee, or agent of ATR and any director,
officer, employee or agent of a registered political
committee, including, but not limited to, a national
party committee.\47\
It is an established fact, publicly admitted by ATR President
Grover Norquist, that the Republican National Committee
``donated'' $4.6 million to ATR in October 1996. Any and all
documents relating to this donation would certainly be
responsive under both paragraphs 9 and 25. Despite this, ATR
failed to produce to the Committee any documents relating to
this transaction. The Committee now knows, however, that
certain documents relating to this transaction do exist because
they were subsequently produced to the Committee by the
RNC.\48\ Among these documents are four separate letters from
Haley Barbour to ATR's executive director, each of which notify
her of the RNC's donations ``through its non-federal component,
the Republican National State Elections Committee.'' \49\ This
clearly evidences the RNC's contribution to ATR of soft money
for partisan political purposes. ATR withheld these documents
from the Committee. The failure to produce these documents by
whomever was responsible for ATR's production may well amount
to obstruction of justice.
It is also an established fact, publicly admitted by ATR's
Norquist, that the money ATR received from the RNC was used to
conduct a direct mail and phone bank campaign addressing the
Medicare issue.\50\ The RNC produced another document,
``Memorandum for the Field Dogs,'' which was created shortly
before ATR began its direct mail campaign.\51\ The document
refers to an attached copy of one of the direct mailings that
was to be sent out by ATR. The document also refers to an
attached map of the 150 congressional districts to which the
mailings were to be directed. It is obvious from this document
that there was communication between ATR and the RNC concerning
ATR's direct mail campaign--how else does one explain how the
RNC had an advance copy of ATR's mailing, as well as a map of
the exact districts to which the mailing would be sent? Despite
the fact that such communications would fall squarely under
subpoena paragraph 25, ATR withheld from the Committee
documents pertaining to such communication. The failure to
produce this material may also constitute obstruction of
justice.
Documents pertaining to this direct mail and phone bank
campaign would also fall squarely under subpoena paragraph 17.
This paragraph called for the production of:
All documents referring or relating to, or containing
information about, any voter education activity,
including telephone banks and direct mail, planned,
produced or paid for by ATR. Documents include, but are
not limited to, communications with regard to such
activity, copies of such mailings or telephone scripts
including drafts, billing invoices and other documents
relating to the cost of production, and memoranda or
other documents containing dates, amounts, and
locations of mailings, and the number of calls placed,
dates of calling, and area codes to which calls were
made.\52\
While ATR did produce some documents pertaining to its direct
mail and phone bank campaign, it withheld from the Committee
any documents identifying the congressional districts to which
the mailings were directed (information it apparently provided
to the RNC) or the area codes to which phone bank calls were
directed. As a result, the Committee to this day still does not
know where ATR directed its direct mail and phone bank efforts.
Finally, we know that ATR also withheld from the Committee
documents called for under subpoena paragraph 15. That
paragraph read as follows:
All documents referring or relating to, or containing
information about, advertising that was planned,
produced or paid for by ATR. Documents include, but are
not limited to, communications with any media
consultant or buyer, transcripts, drafts, video copies,
billing invoices, and memoranda or other records
containing times, dates and locations of
broadcast.53
It is undisputed that ATR produced and paid for a 30-second
television advertisement aimed at New Jersey senatorial
candidate Robert Torricelli.54 Some invoices
pertaining to this advertisement were among the documents
produced by ATR; 55 however, ATR did not produce to
the Committee either a transcript or a video copy of the
advertisement. ATR also failed to produce to the Committee
complete records of the dates and locations of distribution of
the advertisement. The Committee did obtain a video copy of the
advertisement from Senator Torricelli's office, the content of
which makes it clear that this was no issue ad--the
advertisement had nothing to do with tax reform, but rather was
a direct attack on Torricelli's voting record as a Congressman.
Had ATR provided the Committee with the content of the
advertisement and complete records of the dates and locations
of the advertisement's airing, it certainly would have
contradicted its own statement in its June 11 transmittal
letter that ATR ``has never run political advertising on any
subject.'' 56 The failure to produce this material
may well constitute obstruction of justice.
The examples cited above demonstrate that documents exist
which were called for under the Committee's subpoena and which
were directly relevant to the core issues under investigation
by the Committee. Not only did ATR withhold such documents, but
the statements in ATR's transmittal letter of June 11, 1997,
calling into question the jurisdiction of the Committee, make
it clear that ATR's actions were taken consciously and
willfully. As such, these actions constitute willful
obstruction of this Committee's investigation.
CONCLUSION
The Senate investigation into the 1996 campaign represented
a missed opportunity for a number of reasons as outlined in the
Executive Summary to this Minority Report. Of more long-term,
institutional concern, however, is the fact that the
investigation has potentially jeopardized future congressional
investigations. Entities on both sides of the political aisle
openly resisted the Committee's investigative powers, but
certain GOP-affiliated entities actively engaged in impeding
and defying the inquiry. The Republican National Committee, the
National Policy Forum, Americans for Tax Reform, and Triad
failed to respond to deposition subpoenas, and their employees
blithely refused to appear for depositions or, if they did
appear, declined to answer questions. The Majority took no
meaningful enforcement action against any of these
organizations. This may have set a damaging precedent for
future Senate probes.
It is also extremely troubling that some of the lawyers who
represented these organizations may have used unethical tactics
in dealing with the Committee and thereby achieved the result
they sought. It appears that certain counsel may have withheld
documents that were responsive to Committee subpoena. None of
the lawyers mentioned in this chapter were cooperative in
providing witnesses for deposition, even when these witnesses
were under subpoena. One lawyer may have deliberately misled
the Committee about which witnesses he represented
57 and may have directly approached a witness to
sign an affidavit even though he knew that witness to be
represented by counsel.58 Clearly, the stakes were
high for many of the entities and individuals involved in this
investigation, but nothing can justify the kind of behavior
that the Committee experienced with certain counsel. In future
congressional investigations, these tactics should not be
tolerated.
footnotes
\1\ Memorandum to ``TRIAD Employees'' from ``Carolyn'' (Malenick)
regarding ``Office Computers and Files,'' 2/21/97, TR 20 000005.
\2\ Letter to Michael Madigan from Thomas Wilson regarding
Americans for Tax Reform, 6/11/97.
\3\ Additional documents were provided on June 30, 1997. In the
transmittal letter to Michael Madigan from Thomas Wilson regarding the
National Policy Forum, Wilson stated that neither the June 6 nor the
June 30 productions were to be construed as compliance with the
Committee's subpoena, 6/30/97.
\4\ Letter to RNC Chairman Jim Nicholson from Chairman Fred
Thompson requesting that Nicholson investigate complaints by the
Minority that the RNC was not fully complying with the terms of its
subpoena and, with respect to witnesses, urging him to instruct counsel
``not to attempt to shield important facts . . .,'' 6/11/97.
\5\ Subpoena to Republican National Committee, # 67, Request # 14
of Schedule A, 4/9/97.
\6\ Confidential Memorandum to Haley Barbour, Sanford McCallister,
and Curt Anderson from Jo-Anne Coe regarding the American Defense
Institute, 10/17/96, DFP-004240.
\7\ Letter to Grover Norquist from Jo-Anne Coe including a check in
the amount of $100,000 for Americans for Tax Reform from Carl Lindner,
10/21/96, DFP-004241.
\8\ Letter to David O'Steen from Jo-Anne Coe including a check in
the amount of $100,000 for the National Right to Life Committee, 10/21/
96, DFP-004243.
\9\ Document listing money distributed to three 501(c)(4)
organizations and two 501(c)(3) entities, DFP-004244.
\10\ Letter to Minority Counsel from Martin Weinstein demonstrating
Weinstein's ``effort to efficiently produce all current and former RNC
employees with whom the Committee wishes to speak . . .,'' 5/20/97.
\11\ Letter to Martin Weinstein from Majority and Minority Chief
Counsels regarding the Committee's intention to depose certain
individuals, 8/5/97.
\12\ Letter to Majority and Minority Chief Counsels from Martin
Weinstein regarding the scheduling of deponents in connection with the
RNC, 8/14/97.
\13\ Subpoenas to Scott Reed, # 392, and Jo-Anne Coe, # 396, 9/18/
97.
\14\ Letter to Majority Chief Counsel from Martin Weinstein
regarding the Republican National Committee, 10/22/97.
\15\ Subpoenas to Triad Management Services, Inc., #72 (22
paragraphs under Schedule A); Citizens for the Republic Education Fund,
#74 (25 paragraphs under Schedule A); and Citizens for Reform, #75 (9
paragraphs under Schedule A); 4/9/97.
\16\ Memorandum to ``TRIAD Employees'' from ``Carolyn'' (Malenick)
regarding ``Office Computers and Files,'' 2/21/97, TR 20 000005.
\17\ Meredith O'Rourke deposition, 9/3/97, pp.30-31.
\18\ Subpoena to Triad Management Services, Inc., # 72, Request #
10 of Schedule A, 4/9/97.
\19\ Subpoenas to Carolyn Malenick, # 255; Lyn Nofziger, # 248; and
Carlos Rodriguez, # 249; 7/11/97.
\20\ Carolyn Malenick deposition, 9/16/97, p. 17; Lyn Nofziger
deposition, 9/16/97, pp. 10-11; Carlos Rodriguez deposition, 9/17/97,
p. 8.
\21\ Subpoenas to Mark Braden, # 256, 7/11/97; David Gilliard, #
250, 7/11/97; Kathleen McCann, # 346, 8/21/97; Richard Dresner, # 375,
9/4/97; and James Farwell, # 377; 9/4/97.
\22\ Peter Flaherty deposition, 8/22/97, p.9.
\23\ Letter to RNC Chairman Jim Nicholson from Chairman Fred
Thompson requesting that Nicholson investigate complaints by the
Minority that the RNC was not fully complying with the terms of its
subpoena and, with respect to witnesses, urging him to instruct counsel
``not to attempt to shield important facts...'' 6/11/97.
\24\ Order to National Policy Forum from Chairman Fred Thompson to
produce all documents responsive to the National Policy Forum subpoena,
7/3/97.
\25\ Letter to Majority Chief Counsel from Thomas Wilson regarding
``National Policy Forum--Response to July 3 Committee Communication,''
7/15/97.
\26\ Subpoena to National Policy Forum, # 71, Schedule A, 4/9/97.
\27\ Letter to Majority Chief Counsel from Thomas Wilson regarding
the National Policy Forum, 6/30/97.
\28\ Order to National Policy Forum from Chairman Fred Thompson to
produce all documents responsive to the National Policy Forum subpoena,
7/3/97.
\29\ Letter to Majority Chief Counsel from Thomas Wilson regarding
``National Policy Forum--Response to July 3 Committee Communication,''
7/15/97.
\30\ Subpoena to National Policy Forum, # 71, Request # 2 of
Schedule A, 4/9/97.
\31\ Exhibit 273, Memorandum to RNC Chairman Haley Barbour from NPF
President Michael Baroody regarding ``Some Reasons for Resignation [-]
A Confidential Memorandum to Accompany My June 26 Letter of Resignation
as President of NPF,'' 6/28/94.
\32\ Exhibit 353, Letter to National Policy Forum from Internal
Revenue Service notifying NPF of its disqualification for exemption
under Section 501(c)(4) of the Internal Revenue Code, 2/21/97, NPF
003375 through 003387.
\33\ Subpoena to National Policy Forum, # 71, Request # 20 of
Schedule A, 4/9/97.
\34\ Exhibit 305, Memorandum to Haley Barbour from Grace Wiegers
regarding ``Recruiting Members of Congress to Raise Money for NPF,'' 2/
13/95.
\35\ Exhibit 308, Memorandum to John Bolton from Grace Wiegers and
Dianne Harrison regarding ``Megaconference Sponsorship,'' 5/23/95.
\36\ Subpoena to National Policy Forum, # 71, Request # 23 of
Schedule A, 4/9/97.
\37\ Exhibit 258, Memorandum to Haley Barbour, Mike Baroody, and
Ken Hill from Scott Reed regarding ``NPF Action,'' 6/2/93.
\38\ Letter to Majority Counsel from Thomas Wilson regarding the
National Policy Forum, 6/30/97. See also, Wilson's letter to Majority
Chief Counsel dated 7/15/97, in which he repeated the claim that
``[t]he Forum had nothing to do with the 1996 Federal election
campaigns....''
\39\ See Chapter 3
\40\ Exhibit 353, Letter to National Policy Forum from Internal
Revenue Service notifying NPF of its disqualification for exemption
under Section 501(c)(4) of the Internal Revenue Code, 2/21/97, NPF
003375 through 003387.
\41\ Subpoena to Americans for Tax Reform, # 70, Schedule A, 4/9/
97.
\42\ Letter to Majority Chief Counsel from Thomas Wilson regarding
Americans for Tax Reform, 6/11/97.
\43\ Letter to Majority Chief Counsel from Thomas Wilson regarding
Americans for Tax Reform, 6/11/97.
\44\ Letter to Thomas Wilson from Majority and Minority Chief
Counsels ``Committee Subpoena 000070,'' 8/15/97.
\45\ Letter to Majority Chief Counsel from Thomas Wilson containing
affidavit of Peter Ferrara, Document Custodian for Americans for Tax
Reform, 9/3/97.
\46\ Subpoena to Americans for Tax Reform, # 70, Request # 9 of
Schedule A, 4/9/97.
\47\ Subpoena to Americans for Tax Reform, # 70, Request # 25 of
Schedule A, 4/9/97.
\48\ See, e.g., R 014844, R 046264, R 046260, R 046261, R 046265, R
046252, R 046248, R 046249, R 046253, R 046270, R 046266, R 046267, R
046271, R 046258, R 046254, R 046255, R 046259.
\49\ Letters from Haley Barbour to the Executive Director of ATR--
R046265, R046253, R046271, and R046259.
\50\ See Chapter 11.
\51\ ATR ``Memorandum for the Field Dogs'' regarding ``Outside Mail
and Phone Effort,'' R014844
\52\ Subpoena to Americans for Tax Reform, # 70, Request # 17 of
Schedule A, 4/9/97.
\53\ Subpoena to Americans for Tax Reform, # 70, Request # 15 of
Schedule A, 4/9/97.
\54\ See Chapter 11. A videotaped copy of the advertisement is
maintained in the Committee's files.
\55\ ATR invoices for ``Torricelli/Missing,'' ATR 000101, 000102,
000106, 000107, 000108.
\56\ Letter to Majority Chief Counsel from Thomas Wilson regarding
Americans for Tax Reform, 6/11/97.
\57\ Letter to Martin Weinstein from Alan Baron regarding RNC
depositions, 9/30/97.
\58\ Letter to Alan Baron from Benton L. Becker regarding
affidavit of Richard Richards, 12/16/97.
PART 7 INVESTIGATION PROCESSES
Chapter 41: The Breakdown of Compliance
As explained in Chapter 40, the Committee encountered
significant problems in enforcing outstanding subpoenas to
certain Republican groups beginning in April 1997.
Nevertheless, in May and late July the Democratic members of
the Committee requested that several other subpoenas be issued
to tax-exempt entities. On May 23, the Committee issued a
subpoena to the AFL-CIO and on July 30, the Committee issued 26
subpoenas to other independent organizations. Many of these
organizations did not comply with the Committee's subpoenas,
primarily objecting to their broad scope.
finding
The Committee's failure to pursue enforcement actions
against those who failed to comply with the Committee's
subpoenas threatens to have lasting impact on the success and
credibility of future Senate investigations. The Committee's
acceptance of the refusal of groups and individuals to comply
with the Committee's subpoenas will make objective
investigations in the future much more difficult by emboldening
persons and entities to ignore future Senate subpoenas.
introduction
As the investigation progressed during the summer of 1997,
the Republican National Committee, Triad and its affiliates,
Americans for Tax Reform, and the National Policy Forum all of
which received subpoenas in April 1997 continued to seriously
impede the Committee's requests for information. Despite the
problems the Minority encountered in enforcing existing
subpoenas to these groups, the Democratic members of the
Committee requested that several other subpoenas be issued to
tax-exempt entities. Some of the requests for subpoenas had
originally been made in April, when for example, the Minority
first proposed issuing a subpoena to the Christian Coalition.
On May 23, the Committee issued a subpoena to the AFL-CIO and
on July 30, the Minority was able to secure subpoenas long-
sought for 13 entities. These were issued in conjunction with
12 proposed by the Majority, bringing to 26 the total of new
subpoenas issued primarily to tax-exempt entities.1
---------------------------------------------------------------------------
Footnotes appear at end of chapter 41.
---------------------------------------------------------------------------
Each subpoena required the organization to produce a
significant amount of information to the Committee, including
organizational, financial, and political records created during
the 1996 election cycle. The subpoenas also demanded sensitive
information such as membership lists, contributions, and lists
of political donations. Even where the demands fell within the
scope of the Committee's mandate, the organizations complained
that complying with the subpoenas would have been very time-
consuming and exorbitantly expensive.
The Majority and the Minority had agreed earlier in the
investigation to provide supporting information for each of the
subpoenas they requested. As was the case with the subpoenas
issued in April, the Minority was primarily interested in
investigating whether any of the entities in question misused
their tax-exempt status, illegally coordinated issue
advertising with the GOP, or improperly used voter guides. The
Majority's rationale for many of its subpoenas was less
obvious, but the main goal was clearly to isolate information
relating to any participation in a coordinated campaign
strategy to advocate a Democratic victory in the elections.
Subpoena compliance became a contentious issue during the
hearings. Many of the organizations lodged a number of
objections relating to the scope of the Committee's subpoenas
and the type of information demanded. As earlier undertaken by
the National Policy Forum and other Republican entities,
several entities subpoenaed later joined together in refusing
to provide documents to the Committee without a narrowing of
the subpoenas' scope.2 Eventually the entire
subpoena process broke down, and virtually none of these
entities fully complied with a subpoena. Some, like the
Christian Coalition, showed nothing less than contempt for the
Committee when they refused to provide copies of voter guides
even though millions of copies had been distributed to the
public.3
This chapter provides background information on the
subpoenaed groups, the allegations against them, and the degree
to which they complied with the Committee's document,
deposition, and hearing subpoenas. Since circumstances
surrounding the AFL-CIO subpoena distinguish it from the rest
of the entities, it is addressed first.
Allegations against the AFL-CIO are discussed in Chapter 19
of this Minority Report. The fundamental allegations against
the AFL-CIO were (1) that by spending a substantial amount of
money on issue ads and other advocacy activities in 1996, the
organization had an impermissible effect on the 1996 federal
elections and (2) that the organization improperly coordinated
its issue ads with the White House and the DNC.
On May 30, the Committee served a 17-page subpoena to the
AFL-CIO with a June 15 return date for all materials described
in the subpoena. The subpoena requested an inordinate amount of
information from the organization. The Committee requested all
information from 46 different categories, including:
all documentation regarding the operating
structure of the AFL-CIO;
all documents filed by the AFL-CIO with the
U.S. Department of Labor;
all financial records of the organization,
including audits performed by outside groups;
all employee information relating to
political activities;
membership lists of the organization;
all telephone records for which AFL-CIO paid
the bills;
all information regarding any contribution
of funds or services received or made by the AFL-CIO
with respect to federal political activity; and
all documents responsive to political
activity between the AFL-CIO and several specific
political entities, including the DNC, Clinton/Gore,
the National Education Association and EMILY's
List.4
After voicing objections about the breadth and
consitutional implications of the subpoena, the AFL-CIO met
with both Majority and Minority counsels in June to discuss the
matter. Although the Majority agreed to allow for a rolling
production of documents, it would not agree to address the
constitutional issues raised by the AFL-CIO attorneys, nor
would it agree to issue a new subpoena narrowing the breadth of
the May 30 subpoena. In early August, the Majority submitted to
the Minority a list of individuals the Majority intended to
depose, including AFL-CIO President John Sweeney. The
Committee, however, never contacted those individuals or
scheduled the depositions.
On August 20, the AFL-CIO made a document production to the
Committee, but informed Committee staff that problems with its
subpoena would have to be resolved before it would produce
additional documents. The AFL-CIO also submitted to the
Committee a 75-page memorandum explaining the legal bases for
its objection. The AFL-CIO thus became the third organization,
after the National Policy Forum and Americans for Tax Reform,
to challenge the Committee's subpoenas.5
In its memorandum, the AFL-CIO claimed that the document
subpoena exceeded the scope of the Committee's mandate and,
more importantly, infringed upon the organization's First
Amendment rights. It also stated objections based on attorney-
client privilege; individual privacy rights of employees,
members, and others; and proprietary interests, such as the
production of computer programs. The appendix to the AFL-CIO's
``Memorandum of Points and Authorities in Support of AFL-CIO's
Objections to Document Subpoena'' contained a line-item list of
objections to producing documents under each of the 46
categories of requested information. Fundamental to the
objections was the assertion that the document subpoena was
``overly broad, burdensome and oppressive'' on several fronts,
given the volume of the documents that the AFL-CIO would have
had to produce in each area, sometimes hundreds of thousands of
documents for a single category alone.6
The Chairman accused the AFL-CIO of obstructing the
Committee's process by failing to provide all information
requested by the subpoena. He also accused the organization of
failing to provide witnesses to the Committee.7 In
fact, the Majority staff failed to schedule these depositions.
Although the AFL-CIO attorneys had been told by Majority staff
that no employees or officers of the federation would be
deposed, late on the night of September 19--a Friday--the
Majority faxed to counsel for the AFL-CIO three deposition
subpoenas for individuals associated with the AFL-CIO
compelling them to testify the following week. TheMajority did
not provide notice to the Minority.8 The AFL-CIO attorneys
informed the Majority that the witnesses were attending the AFL-CIO
annual convention in Pittsburg and would not be available on such short
notice. Over the next four months of the investigation the Majority
never contacted AFL-CIO counsel to reschedule the depositions. In
September, the Majority did propose to the Minority to call AFL-CIO
Secretary-Treasurer Richard Trumka as a hearing witness, but never did.
Even before the AFL-CIO filed its August 20 objection,
several other groups that had been subpoenaed by the Committee
on July 30 announced they would object to the Committee's
subpoenas. On September 3, five organizations notified the
Committee that they had adopted the position of the AFL-IO and
joined the Christian Coalition in signing a letter to the
Committee objecting to the scope of their subpoenas. The letter
asserted that the subpoenas exceeded the investigative
authority of the Committee, demanded the production of
sensitive documents protected under federal law due to their
confidentiality, were ``overly broad, unduly burdensome, and
oppressive,'' and ``violate[d] the First Amendment rights of
the subject organizations and their members.'' 9 The
Chairman did not enforce the subpoenas.
organizations suggested for subpoena by the minority
In the Minority's view, several organizations should have
been the subjects of intensive investigation by the Committee,
based on indications that these groups may have violated
federal laws during the 1996 election cycle. A few of these
organizations were subpoenaed, but the Committee did not
further investigate the allegations against them.
These organizations, all subpoenaed on July 30, fell into
three broad categories: (1) tax-exempt organizations associated
with Republican Presidential candidates, (2) other tax-exempt
groups and (3) private corporations linked to contribution
laundering.
tax-exempt groups linked to presidential campaigns
Republican Exchange Satellite Network, a
group associated with Lamar Alexander;
The Better America Foundation, which was
connected to former Senator Bob Dole; and
The American Cause, which was linked to
commentator Pat Buchanan.
These nonprofit organizations allegedly served as shadow
campaign vehicles by providing crucial support to presidential
campaigns. The organizations reportedly provided travel
expenses, polling research, speech-writing, and paid staff
salaries for persons affiliated with, but not directly employed
by, presidential campaigns. It is alleged, therefore, that
these groups were almost entirely political in nature and yet
failed to register with the FEC as political organizations.
Based on press accounts and other publicly available
material, the Minority believes these entities may have engaged
in some or all of the following prohibited partisan activities:
participated in prohibited political campaign activities;
failed to register as political committees; improperly
coordinated expenditures; violated express advocacy
requirements; improperly advocated for political candidates
using independent expenditures; and circumvented federal limits
on spending.
Republican Exchange Satellite Network and Lamar Alexander
The Republican Exchange Satellite Network (``RESN'') was a
nonprofit organization established by Lamar Alexander, former
Governor of Tennessee who served as President George Bush's
Secretary of Education. Alexander was a candidate for the
Republican presidential nomination in 1996.
Alexander established RESN within days of leaving President
Bush's cabinet in January 1993. At least one press report
contained allegations that RESN was used to pay for travel and
other campaign-related activities on behalf of
Alexander.10 RESN even employed a full-time
organizer in Iowa and most of its employees were later listed
as employed by the Alexander presidential
campaign.11 RESN was disbanded on March 9, 1995, a
few weeks after Alexander launched his presidential campaign,
and its assets were transferred to the National Policy Forum,
an organization chaired by Haley Barbour, who was also chairman
of the Republican National Committee.12
RESN ultimately raised over $5.5 million during its short
life, largely from major Alexander contributors.13
RESN's activities and its funding sources prompted allegations
that it was a campaign committee promoting Lamar Alexander's
presidential campaign. 14 Alexander admitted he used
this nonprofit organization ``to develop a political and
financial base . . . and develop my message for where we're
going to take the country.'' 15
RESN made only a token production of documents by the
return date which was supplemented by productions on November 4
and 6--11 weeks beyond the required return date and after
Chairman Thompson announced that the investigative phase of the
Committee hearings had concluded.
The documents contained little information that was not
publicly available. Included in the production were news
articles, RESN publications, and corporate by-laws.
Better America Foundation and Bob Dole
The Better American Foundation (``BAF'') was established in
1993 by Senator Bob Dole, who won the Republican Party's
presidential nomination three years later. He disbanded BAF in
June 1995, just as he was launching his official campaign
organization. According to numerous published reports, BAF was
actually a Dole campaign organization created and used to aid
his 1996 presidential efforts. If true, this would constitute
violations of federal campaign law.16 The
allegations arose because:
(1) BAF's founding president, Jo-Anne Coe,
had worked for Dole since 1967, served as executive
director of his leadership PAC from 1988 to 1995, and
was the national finance director for his 1996
presidential campaign;17
(2) BAF was initially run by Coe out of the
offices of Dole's leadership PAC, Campaign
America;18
(3) BAF commissioned several polls;
19
(4) BAF paid for TV ads featuring Dole;
20 and
(5) BAF had regular contact with Dole
campaign staff. 21
These activities strongly suggest coordination of activities
and funding between a nonprofit organization and a political
candidate, which is prohibited by federal election law.
22
From 1993 to the end of 1994, the foundation raised over
$4.9 million from anonymous donors.23 One of its
brochures noted that, ``there are no limits on the amounts an
individual or corporation may contribute'' and that ``there is
no requirement for public disclosure of contributors . . . and
names of the donors will not be disclosed.'' 24
Later, after much press criticism, the foundation released a
list of its donors.25 It has also been alleged in
the press that the foundation ``provided a legal way for
corporations to win favor with the Republican Party's leading
presidential candidate without any limits on their
contributions or detailed reporting requirements.''
26
Dole closed the foundation only after it was revealed that
the foundation spent more than $1.5 million of its total $4.9
million budget on expenditures which benefitted Dole's
presidential effort, including an opinion poll, a TV commercial
featuring Dole, and a fundraising brochure.27
The Better America Foundation provided a small, incomplete
production of documents on November 14, 12 weeks after the
required due date and after Chairman Thompson announced that
the investigative phase of the Committee's hearings had
concluded.
The American Cause and Pat Buchanan
The American Cause was established by Pat Buchanan in 1993
and closed down in March 1995. It raised more than $2 million,
most of which was allegedly used to support Buchanan's
presidential bid, which would violate federal campaign law. For
example, American Cause compiled a donor list which it rented
to the Buchanan campaign, it rentedoffice space from the
campaign, and it provided ``volunteers'' to the campaign who were
actually American Cause employees.28 Further, numerous press
reports contain allegations that Buchanan ran afoul of federal election
funds by using $8,000 of Federal matching money to pay for computers
and other equipment for American Cause.29
The American Cause provided a small, incomplete production
on September 16, more than three weeks beyond the due date.
other tax-exempt groups
Other tax-exempt organizations that may have engaged in
improper and/or illegal campaign activities:
Citizens Against Government Waste;
The Heritage Foundation;
The Coalition: Americans Working for Real
Change;
American Defense Institute/American Defense
Foundation;
Citizens for a Sound Economy;
Women for Tax Reform;
The National Right to Life Committee;
The Christian Coalition.
Citizens Against Government Waste
Citizens Against Government Waste (``CAGW'') is a 501(c)(3)
organization.30 It has been reported to be under
investigation by the IRS for allegedly engaging in improper
political activities.31 The Minority believes CAGW
may have engaged in partisan activity, exceeded limits on
nonpartisan campaign activity, misled the IRS in its
application for tax- exempt status, failed to register as a
political committee, improperly coordinated expenditures, and
circumvented federal campaign spending limits.
CAGW, like a number of other not-for-profit organizations,
apparently paid for mailings and provided the Dole campaign
with donor lists after Dole signed a fundraising letter for the
group.32 In addition to the potential violation of
the tax laws, such activities might also constitute an illegal
in-kind contribution to the Dole campaign. An estimated ten
million letters were mailed by Heritage, CAGW, and a small
number of other groups at a reported postage cost of $80,000
per million letters.33 Additionally, the donor lists
may have been worth $40,000 or more to the Dole
campaign.34
Citizens Against Government Waste made two small,
incomplete productions on September 8 and 9--three weeks beyond
the due date.
The Heritage Foundation
The Heritage Foundation is registered with the IRS as a
501(c)(3) charitable organization, meaning that contributions
to it are tax-deductible and that the organization is strictly
forbidden to engage in partisan campaign activity. Heritage is
being investigated by the IRS for allegedly engaging in
improper political activities.35 The Minority
believes that Heritage may have exceeded limits on political
activity, misrepresented facts to obtain tax exempt status,
failed to register as political committee, improperly
coordinating expenditures, and circumvented federal campaign
spending limits.
As noted above, Heritage, like a number of other not-for-
profit organizations, apparently paid for mailings and provided
the Dole campaign with donor lists after Dole signed a
fundraising letter. The letter was mailed in 1995 on Dole's
letterhead at Heritage's expense. In it, Dole said, ``I want to
get Washington off your back and out of your pocket.''
36 In addition to the potential violation of the tax
laws, such activities might also constitute an illegal in-kind
contribution to the Dole campaign. As noted earlier, an
estimated ten million letters were mailed by Heritage, CAGW,
and several other groups at a reported postage cost of $80,000
per million letters.37 Additionally, the donor lists
may have been worth $40,000 or more to the Dole
campaign.38
On August 15, one week early, the Heritage Foundation
produced two volumes of documents consisting primarily of
publicly available material. Heritage supplemented this
production on August 25.
The Coalition: Americans Working for Real Change
The Coalition: Americans Working for Real Change
(``Coalition'') is composed of approximately 30 business
organizations, including the U.S. Chamber of Commerce and the
National Association of Manufacturers.39 The
Minority believes the Coalition may have engaged in partisan
activity, failed to register as a political committee,
improperly coordinated expenditures, improperly engaged in
issue advocacy, and circumvented federal campaign spending
limits.
According to its spokesman, the Coalition was formed to
counterbalance issue ads run by the AFL-CIO.40 To do
so, it reportedly spent at least $4.5 million, supported 23
Republican incumbents, and criticized the voting records of
four Democrats in tight races.41 The Coalition's ads
also contained nearly identical language to that used in ads
broadcast by the National Republican Congressional Coalition
(``NRCC''), a division of the RNC. In addition, the Coalition's
ads were run at the same time as the NRCC's ads and in
districts where the Republican incumbent's seat was
vulnerable.42 Although the Coalition's ads avoided
the so-called ``magic words'' of express advocacy, the ads are
a prime example of partisan activities by a nonprofit
organization.43 In addition, there are indications
that the Coalition was primarily engaged in political
activities, meaning that it should have complied with the
registration and reporting requirements of the Federal Election
Campaign Act (``FECA'').44
The Coalition and the U.S. Chamber of Commerce forwarded
written objections to the Committee's subpoena on September 16,
three weeks beyond the return date on the subpoena. They never
complied with the subpoena.45
American Defense Institute/American Defense Foundation
The American Defense Institute (``ADI'') and the American
Defense Foundation (``ADF'') are tax-exempt organizations
operated from the same offices under the same management. The
difference between the organizations is that ADI is a 501(c)(3)
and ADF is a 501 (c)(4).46 Press reports indicate
these organizations have both received large sums of money from
the RNC and the National Republican Senatorial Committee
(``NRSC''), a division of the RNC, shortly before election
cycles, including special elections.47
ADI and ADF conduct get-out-the vote drives aimed at
military personnel through mailings and ``public service
announcements.'' ADI received $600,000 from the RNC in the last
election cycle.48 ADI had received similar
contributions in 1992 and been criticized for its assistance to
Republican candidates, leading it to return the money, but not
until just after it had received $530,000 from six individual
donors funneled through the RNC.49 In short, the
allegation is that the ADI/ADF were used by the RNC during the
1996 election cycle to conduct election-related activities
after the RNC has ``maxed out'' in a particular state.
ADI/ADF requested clarification instructions on September
5, two weeks beyond the required due date, but never produced
any documents.50
Citizens for a Sound Economy
Citizens for a Sound Economy (``CSE'') is a 501(c)(4)
chaired by C. Boyden Gray, former White House Counsel in the
Bush Administration. CSE was founded in 1984 as a think tank
and grass-roots organization, and while the group has a number
of members, most of its funding comes from a few major
corporations, including foundations associated with the Koch
family of Kansas. Koch interests gave more than $8 million to
CSE and contribute on average $750,000 annually.51
The Minority also believes that the Kochs have been important
supporters of Triad, which is discussed in Chapter 12 in this
Minority Report.
CSE also reportedly cultivated close ties with the
Republican leadership. According to press reports, former
Majority Leader Bob Dole's Better America Foundation gave CSE
$50,000 in 1995. Dole also signed a fundraising letter for the
group. In return, CSE provided Dole with its contributors''
names.52 CSE also joined forces with House Majority Leader
Richard K. Armey on the flat-tax bill in 1995 who ``estimated CSE would
spend about $2 million on the campaign.'' 53
Citizens for a Sound Economy made two small, incomplete
productions on September 12 and 15--three weeks beyond the due
date.
Women for Tax Reform
Women for Tax Reform (``WTR'') was formed in August 1996 as
an affiliate of Americans for Tax Reform, a nonprofit
organization run by Republican activist Grover Norquist (see
Chapter 11). The Minority believes that WTR may have engaged in
partisan activity, exceeded limits on nonpartisan campaign
activity, misrepresented facts to obtain tax-exempt status,
failed to register as a political committee, improperly
coordinated expenditures, and engaged in express advocacy on
behalf of Republican candidates.
The Minority's investigation of ATR produced evidence that
WTR worked in concert with ATR to organize its activities to
evade election laws in violation of ATR's and WTR's tax-exempt
status. WTR has the same office address and some of the same
officials as Americans for Tax Reform.54
On April 1, the Minority submitted a draft subpoena for WTR
documents. A final subpoena was issued on July 30. On October
3, WTR made a limited production of 149 pages of documents
along with a letter stating that the documents were produced
``voluntarily and purely as a matter of grace, not because WTR
believes that any of the documents produced are called for by
the subpoena. . . .'' 55 The attorney, Thomas
Wilson, used similar language when he produced ATR documents.
WTR made a small, incomplete production on October 3--six weeks
beyond the due date.
National Right to Life Committee
The National Right to Life Committee (``NRLC'') is a tax-
exempt organization which received $650,000 in 1996 from the
Republican National Committee 56 and may have
received additional donations in previous cycles that were
apparently used for political activity (e.g. voter guides,
GOTV). For example, in November, 1994, Senator Phil Gramm
authorized a $175,000 donation from the National Republican
Senatorial Committee to the NRLC in order to ``help activate
pro-life voters in some key states where they would be pivotal
to the [1994] election.'' 57 Furthermore, Senator
Dole's Better America Foundation donated $125,000 to the NRLC
one day before the 1994 elections.58
NRLC produced three boxes of documents, but did not fully
comply with the subpoena. On September 3, the group joined six
others to object to its subpoena.59
The Christian Coalition
The Christian Coalition has operated for nearly a decade as
a 501(c)(4), although the IRS has not granted final approval
for its tax-exempt status. The Christian Coalition is
ostensibly operated as a social welfare organization dedicated
to informing the public about Christian values. In fact, it
actively strongly support the conclusion that it is in fact a
partisan political organization that operates on behalf of
Republican candidates, as discussed in Chapter 14 of the
Minority Report.
The Minority first proposed a subpoena for the Christian
Coalition on March 3, but issuance was not approved by the
Committee until July 30. The Christian Coalition did not comply
with the subpoena and joined several other organizations in
September in objecting to Committee subpoenas.60
private corporations linked to contribution-laundering
Private corporations linked to illegal schemes to launder
contribution to Republican candidates:
DeLuca Wine & Liquors, and
Empire Landfill.
DeLuca Liquor & Wine and Empire Landfill, Danella Inc./USA Waste
Services of Eastern Pennsylvania
Various Republican donors involved in schemes to launder
contributions through employees, including DeLuca Liquor and
Wine (``DeLuca'') and Empire Landfill (``Empire'), which are
discussed in Chapter 22, led the Minority to recommend that
these entities be further investigated by the Committee.
The Committee issued a subpoena to DeLuca, which produced a
single folder containing 27 pages of documents on August 25--
three days beyond the due date.61 The folder
contained a corporate organizational chart as well as copies of
canceled checks from DeLuca to five employees and canceled
checks from those employees and their wives payable to ``Dole
for President.'' Although the production was limited, the
materials raise numerous questions which are explained in
Chapter 22 of the Minority Report.
The Committee subpoenaed Empire Landfill's former
president, Renato Mariani. Mariani did not produce documents to
the Committee upon asserting his Fifth Amendment right against
self incrimination.
organizations suggested for subpoena by the majority
The groups that the Majority subpoenaed on July 30 comprise
three broad categories:
1. Those affiliated in some way with the labor
movement or linked in some way to allegations against
the labor movement:
National Council of Senior Citizens;
Citizen Action; and
National Education Association.
2. Those named by Harold Ickes in a memo to Warren
Meddoff (see Chapter 17):
Vote Now ``96, and
Campaign to Defeat 209.
3. Those traditionally affiliated with Democratic
causes or issues:
The Sierra Club;
Democratic Leadership Council;
EMILY's List;
The National Committee for an
Effective Congress;
American Trial Lawyers'' Association;
and
Americans United for the Separation
of Church and State.
The subpoenas to groups in the first two categories were
justified, but at least some of the groups in the third
category were apparently targeted by the Majority simply
because they have historically been more philosophically
aligned with the Democratic Party. The Minority is aware of no
evidence that any of these organizations were involved in
illegal or improper activities in the 1996 election.
Among other things, all of the subpoenas demanded
organizational and financial information; documentation of the
organizations'' tax-exempt status; membership lists; telephone
numbers; information on get-out-the-vote activities, issue and
campaign advertising, and public opinion polls; information on
money transfers to and from foreign principals; information on
transfers of or solicitations for anything of value to or from
federal candidates, campaigns, or political parties;
information on how the organizations allocated their funds to
candidates; information on any interaction with any combination
of other entities subpoenaed by this Committee; and anything
relating to communications with the FEC. Some subpoenas also demanded
information on certain events held by organizations; refunds of fees or
dues for political or voter education activities; and records of
election activities.62
National Council of Senior Citizens
Federal prosecutors alleged that the National Council of
Senior Citizens (``NCSC'') was linked to a scheme to launder
money to the reelection campaign of Teamsters'' President Ron
Carey. The prosecutors made this allegation in a criminal
information filed in United States District Court for the
Southern District of New York in connection with the guilty
plea of Martin Davis, a political consultant who provided
services to Teamsters For A Corruption Free Union (``TCFU').
Davis, a central figure in the scheme, headed a firm called the
November Group.63 According to prosecutors, Davis
and Jere Nash, a political consultant for TCFU who provided
direct-mail services, and Michael Ansara, another political
consultant for TCFU, all arranged for the Teamsters to
contribute $85,000 to the NCSC, which then sent the sum to the
November Group, a company responsible for executing the Carey
direct mail campaign. Part of the money paid to the November
Group by the NCSC was funneled by Davis into the Carey campaign
in order to finance the direct mail campaign.
In response to the Committee's subpoena, NCSC produced a
small number of documents. However, it joined with other
nonprofit organizations on September 3 in filing a formal
objection to the Committee subpoena.64
NCSC provided a list of the documents that were and were
not produced, as well as justifications for its refusal to
produce certain documents, including the assertion that the
subpoena violated the First and Fourth Amendments and was
beyond the mandated scope of the investigation. Information
sent to the Committee pursuant to the subpoena included:
organizational and financial materials; telephone and
communications records and directories; Internal Revenue
Service materials pertaining to organization's tax-exempt
status; and Federal Election Commission reports.
NCSC did not produce information on communications with the
Political Action Transition Work Group of the AFL-CIO, other
tax-exempt entities, and the FEC; information relevant to the
allocation of funds for political purposes; information related
to political advertising and advocacy; and copies of the
organization's political mailings and documents related to get-
out-the-vote drives.
Citizen Action
Citizen Action is a grassroots consumer advocacy group
registered with the IRS as a 501(c)(4). In October 1997, it
closed its Washington, D.C. national office, but it continues
to operate field offices in several states. The allegations
against Citizen Action are summarized in Chapter 19 of this
Report. Beyond issuing a document subpoena, the Committee did
not investigate Citizen Action. Citizen Action joined with
seven other non-profit organizations and filed a formal
objection to Committee subpoenas on September 3. The letter
listed the following grounds for objection: the subpoenas 1)
exceeded the investigative authority of the Committee; 2)
demanded the production of sensitive documents that are
protected under federal law due to their confidentiality; 3)
were ``overly broad, unduly burdensome, and oppressive''; and
4) ``violate[d] the First Amendment rights of the subject
organizations and their members.'' 65
After filing this objection, Citizen Action produced
approximately 70 to 80 pages of material. The documents
included information on the organizational structure of Citizen
Action and copies of voter education materials distributed
during the 1996 campaign cycle, including voting records of
candidates and newspaper articles. No one affiliated with
Citizen Action was deposed by the Committee.
National Education Association
The National Education Association (``NEA'') is one of the
largest labor organizations in the United States and is a
member of the AFL-CIO. It has generally backed Democratic
candidates, including President Clinton in his bid for re-
election in 1996. There were no clear allegations made against
the NEA by the Majority.
The NEA sent a letter to the Committee on August 11,
stating that it would be unable to meet the August 22 return
date in the Committee's subpoena, although the letter noted
that the NEA had begun the process of attempting to locate
responsive documents. The letter also asserted the NEA's
``serious concerns'' about the scope of the subpoena, including
possible infringement of the organization's First Amendment
rights of free speech and free association. The NEA requested a
meeting with the Committee to address these issues, but the
Majority's lawyers never scheduled one.66
On August 20, the general counsel to the NEA sent a letter
to the Committee joining the legal objections filed by other
groups, stating that the NEA would not comply further with the
subpoena until its objections--and the joint objections--were
addressed by the Committee.67 The Majority did not
respond to that letter. Pursuant to the position it stated in
its August 20 letter, the NEA did not produce any documents to
the Committee. The Committee did not seek to schedule the
depositions of any witnesses affiliated with the NEA.
Vote Now 96'
Vote Now 96' is a Florida-based project of Citizen Vote,
Inc., a 501(c)(3) organization headquartered in New York that
spearheads voter registration drives, especially in minority
communities.68 Vote Now 96' raised money and made
grants to other 501(c)(3) organizations involved in voter
registration drives.69 In 1996, it raised and
distributed $3 million for voter registration.70
There were a number of allegations concerning Vote Now 96'
which are explained in Chapter 19. In general, however, the
allegations were that DNC and White House officials improperly
directed money to Vote Now 96'.
Vote Now 96' is the only one of the 501(c)(3) and 501(c)(4)
entities subpoenaed that appears to have fully complied with
the demands of the Committee. It produced 726 pages of
documents which were responsive to the subpoena,71
and two members of the Vote Now 96' board voluntarily appeared
for depositions.72 Vote Now 96', under the name of
its parent group Citizens Vote, also produced two small sets of
documents to the Committee in compliance with the subpoena.
The documents indicate that Vote Now 96' complied with
applicable laws. The activities it undertook were nonpolitical
voter registration activities that were appropriate for a
501(c)(3) organization. Review of the documents, corroborated
by deposition testimony, indicates that in evaluating grant
proposals from 501(c)(3) organizations that conducted voter
registration, Vote Now 96' properly denied grants to
organizations that acted in a partisan fashion.73 No
evidence of partisan activity appears in any of the awarded
grant documents.
Campaign to Defeat Proposition 209
Campaign to Defeat 209 is a nonprofit organization that
lobbied to defeat the California Civil Rights Initiative
(``CCRI''). It was one of three organizations suggested by
Harold Ickes to Warren Meddoff as a possible recipient of
contributions from Meddoff's business associate, William Morgan
(see section on Vote Now 96', above, and Chapter 17). Campaign
to Defeat 209 produced a small, incomplete number of documents
to the Committee.
The Sierra Club
The Sierra Club is a well-known nonprofit entity that
advocates environmental protection and resource conservation
and lobbies for pro-environment legislation. Its causes have
been historically supported by Democrats, and it continues to
be an active participant in the political process. During the
1996 cycle it spent more than $7.5 million on media and
grassroots electoral activity, targeting primarily anti-
environmental members of Congress.74 There were no
clear allegations leveled against the Sierra Club by the
Majority.
The Sierra Club produced several boxes of material,
including video and audio tapes, magazines, personal
correspondence and posters, but did not attempt to produce all
documentation requested. Little attention was paid to the
Sierra Club during the investigation, as it did not appear that
it was an especially important entity in the 1996 federal
election campaign cycle. No representatives of the Sierra Club
were interviewed or deposed by the Committee.
Democratic Leadership Council
The Democratic Leadership Council (``DLC'') is a nonprofit
organization that is identified with the moderate wing of the
Democratic Party. During the course of the investigation, no
allegation was made that the DLC has ever been involved in
improper or illegal conduct in connection with the federal
elections of 1996.
The DLC produced a relatively small number of documents,
but did not respond completely to the subpoena, and the
Committee did not pursue the issue.
EMILY'S List
EMILY's List is a political action committee (``PAC'') that
contributes mainly to female Democratic candidates. In response
to the subpoena, EMILY's List did not fully respond to the
subpoena, but did produce two sets of documents contained in 14
boxes. The Majority never made any clear allegations against
EMILY's List.
National Committee for an Effective Congress
The National Committee for an Effective Congress (``NCEC'')
is a ``Democratic political action committee that primarily
supplies sophisticated voter targeting information to the
party's congressional candidates.'' 75 In response
to the subpoena, the NCEC produced one box of documents,
including copies of mailings and other related materials
produced during the 1996 election cycle. There were no clear
allegations leveled against the NCEC by the Majority.
American Trial Lawyers Association
The American Trial Lawyers Association (``ATLA'') is a
nonprofit, 501(c)(4) organization that also functions as a
political action committee, donating mainly to Democratic
candidates. In fact, it serves as one of the largest Democratic
political action committees. It received explicit permission in
FEC Advisory Opinion 96-02 (1996) to endorse congressional
candidates and request that members make campaign contributions
to the endorsed candidates while identifying themselves as ATLA
members. There were no clear allegations made against ATLA made
by the Majority.
ATLA produced documents to the Committee on two occasions.
It provided the Committee with contribution lists, telephone
records, and other documentation regarding the political
activities of the organization with respect to both Democratic
and Republican candidates. These documents contain no
indications that the organization engaged in illegal or
improper activities during the 1996 election cycle. On
September 3, ATLA joined the group of entities that had
previously objected to the Committee's subpoenas.76
After this objection was filed, ATLA no longer complied with
the Committee's requests for information.
Americans United for Separation of Church and State
Americans United for the Separation of Church and State
(``Americans United'') is a 501(c)(4) organization which styles
itself as a national church-state watchdog group.77
Americans United complied with the Committee's subpoena and
produced a small set of documents.
There is no indication of any kind of coordination between
Americans United and any other organizations to influence the
outcome of the elections during the 1996 federal election
cycle. It appears that Americans United was targeted by the
Majority in order to conduct a fishing expedition into the
activities of organizations that support Democratic issues.
conclusion
The Majority's unwillingness to grant Minority subpoenas--
and its steadfast refusal to enforce the limited number that
were eventually granted--call into question the Majority's
pledge to conduct a bipartisan investigation.
Allowing witnesses to continually flout the Committee's
process with impunity sets a troubling precedent for future
Senate investigations. As Senator Joseph Lieberman noted: ``We
are the people's representatives. We are the people's
opportunity to find the facts to search for the truth, and when
parties that we subpoena are asked for information, do not
cooperate, it is an insult to the Congress, and it sets a
precedent that is not one that we should accept.''
78
Beginning in April 1997, when Republican affiliated groups
began to openly defy the Committee's subpoenas, more entities
followed suit in August and September. In total, well over 30
organizations refused to comply to subpoenas validly issued by
the Committee. The Minority repeatedly appealed to the Majority
to enforce the outstanding subpoenas to no avail. For example,
when on October 9, Senator Carl Levin asked the Committee to
enforce outstanding subpoenas, Chairman Thompson replied: ``I
am not going to entertain that today.'' 79 Two days
earlier, the Chairman opined:
It's well known that the Senate imposed a cut-off
date on this Committee. It's also been a very badly
kept secret that people are now systematically
thwarting our subpoenas, not responding to this
Committee because they know that by the time we get
through the contempt proceedings and into court, our
cut-off date will have arrived. That is the sad truth,
but it must be acknowledged.80
Furthermore, the Chairman said the following day, ``We will
make an additional effort to [enforce the Minority subpoenas]
when you get the AFL-CIO to comply with the subpoenas we issued
them.'' 81
These rationales do not justify the Majority's consistent
failure to enforce the outstanding subpoenas issued by this
Committee. First, the entire Senate, not simply the Democratic
members, voted 99-0 to impose the December 31 deadline. The
mere fact that a deadline exists does not per se mean that
enforcement is unrealistic. To do nothing assures failure.
Second, the statement about the AFL-CIO's lack of
compliance is a red herring. The Minority was willing to order
all organizations, including the AFL-CIO, to comply. The AFL-
CIO did produce ten boxes of documents. If the Majority was
dissatisfied with the quality of this production the remedy was
not abdication of the Committee's responsibilities but rather
institution of contempt proceedings. The Minority agreed to
vote to impose contempt on any group or individual that
thwarted the Committee's valid authority process, but the
Majority declined to take any action.82
footnotes
\1\ Subpoenas requested by the Minority: Republican Exchange
Satellite Network, #301; Better America Foundation, #299; American
Cause, #300; Citizens Against Government Waste, #307; the Heritage
Foundation, #306; U.S. Chamber of Congress (Coalition for Change),
#304; American Defense Institute and American Defense Foundation, #'s
294 & 295; Citizens for a Sound Economy, #297; Women for Tax Reform,
#305; National Right to Life Committee, #296; Christian Coalition,
#298; DeLuca Liquor and Wine, Ltd., #302; Renato Mariani (Empire
Sanitary Landfill), #303. Subpoenas requested by the Majority: AFL-CIO,
#95; National Council of Senior Citizens, #285; Citizen Action, #286;
National Education Association, #283; Vote Now, #282; Campaign to
Defeat 209, #288; Sierra Club, #287; Democratic Leadership Council,
#289; EMILY's List, #290; National Committee for an Effective Congress,
#291; American Trial Lawyers Association, #292; Americans United for
the Separation of Church and State, #293.
\2\ Letter to Majority and Minority Chief Counsels from the
Association of Trial Lawyers of America, Christian Coalition, Citizen
Action, Citizens Against Government Waste, International Brotherhood of
Teamsters, National Council of Senior Citizens, and National Right to
Life Committee declaring their objections to subpeonas issued by the
Committee, 9/3/97.
\3\ Letter to attorneys James Bopp, Jr. and Alan Dye from Minority
Counsel, following up on a September 3 meeting with the Christian
Coalition attorneys concerning the Christian Coalition's response to
the Committee's July 30 subpoena, 9/8/97.
\4\ Subpoena to the AFL-CIO, #95.
\5\ Simultaneously, the AFL-CIO produced two boxes of documents
containing what it said were copies of public records that the
organization had filed with the Internal Revenue Service, the Federal
Election Commission, and the U.S. Department of Labor, as well as a
variety of materials generated by the AFL-CIO for political purposes,
including tapes of advertisements sponsored by the organization. Letter
to Senators Thompson and Glenn from counsel for AFL-CIO enclosing a
``memorandum of legal authorities and principles in support of the AFL-
CIO's objections to the document subpoena,'' 8/20/97.
\6\ Appendix to Memorandum of Points and Authorities in Support of
AFL-CIO's Objections to Document Subpoena, 8/20/97.
\7\ Chairman Thompson, 10/9/97, Hrg. pp. 198-199.
\8\ Subpoenas to Gerald Shea, #399; Richard Trumka, #400; and Steve
Rosenthal, #401.
\9\ Letter to Majority and Minority Chief Counsels from the
Association of Trial Lawyers of America, Christian Coalition, Citizen
Action, Citizens Against Government Waste, International Brotherhood of
Teamsters, National Council of Senior Citizens, and National Right to
Life Committee declaring their objections to subpoenas issued by the
Committee, 9/3/97.
\10\ Washington Post, 12/30/95.
\11\ Washington Post, 12/30/95.
\12\ Washington Post, 12/30/95.
\13\ Chattanooga Free Press, 6/22/95; Washington Post, 12/30/95.
\14\ Chattanooga Times, 2/28/95.
\15\ Chattanooga Times, 2/28/95.
\16\ Washington Post, 6/18/95, 8/20/96; Kansas City Star, 6/22/95;
2 U.S.C. 433 & 434 (1997).
\17\ New York Times, 1/28/96; USA Today, 2/28/96.
\18\ Roll Call, 11/7/94.
\19\ Associated Press, 11/2/95.
\20\ Associated Press, 11/2/95.
\21\ Chicago Tribune, 5/26/95; see e.g., letter to Jo-Anne Coe from
Yong Kim, Chairman of Y.Y.K. Enterprises, Inc., concerning a refund
check Kim received from Better America Foundation, 8/17/95.
\22\ 2 U.S.C. 441b (1997).
\23\ Kansas City Star, 6/22/95.
\24\ Brochure for Better America Foundation.
\25\ Washington Post, 6/21/95.
\26\ Washington Post, 6/18/95.
\27\ Washington Post, 6/7/95.
\28\ AP Online, 4/19/96.
\29\ New York Times, 3/4/96.
\30\ 501(c)(3) organizations are tax-exempt and are incorporated as
charitable entities and barred by law from participating in political
campaigns. They may engage in lobbying as defined by statutory
limitations and can establish 501(c)(4) organizations to lobby freely.
26 U.S.C. 501(c)(3) & (4) (1997); 2 U.S.C. 441b (1997).
\31\ Chicago Tribune, 1/12/97.
\32\ Orange County Register, 5/25/96.
\33\ Orange County Register, 5/25/96.
\34\ Orange County Register, 5/25/96.
\35\ Chicago Tribune, 1/12/97.
\36\ Chicago Tribune, 1/12/97.
\37\ Orange County Register, 5/25/96.
\38\ Orange County Register, 5/25/96.
\39\ Advertising Age, 10/14/96; Pittsburgh Post-Gazette, 11/3/96.
\40\ Washington Post, 11/23/97.
\41\ Washington Post, 11/23/97; U.P.I., 10/28/96.
\42\ U.P.I., 10/28/96.
\43\ Examples of phrases constituting express advocacy were
provided by the Supreme Court in footnote 52 of the Court's landmark
decision in Buckley v. Valeo . The terms are commonly referred to as
the ``magic words'' and include `` `vote for,' `elect,' `support,' cast
your ballot for, `Smith for Congress,' `vote against,' `defeat,'
`reject.' '' 424 U.S. 1, 44 (1976).
\44\ 2 U.S.C. 431(4), 433, and 434 (1997).
\45\ Letter to Majority and Minority Chief Counsels from Jan Witold
Baran, representing the Coalition: Americans Working for Real Change,
enclosing a ``Memorandum of Points and Authorities in Support of the
Coalition's Objections to Document Subpoena,'' 9/16/97.
\46\ 501(c)(4) organizations are incorporated as social welfare
organizations. Contributions to these organizations are not tax-
deductible, however, the organization's revenues are tax-exempt. These
organizations have no limitations on the amount of lobbying in which
they can engage, and can participate in politics so long as the
organization does not expressly advocate the election or defeat of a
candidate. 26 U.S.C. 501(c)(4).
\47\ Atlanta Journal, 12/21/97; Hotline, 10/23/97.
\48\ Washington Post, 10/23/97.
\49\ Washington Post, 12/10/96 and 10/23/97.
\50\ Letter to Chairman Fred Thompson from Richard Hauser regarding
the ``American Defense Institute/American Defense Foundation,'' 9/5/97.
\51\ National Journal, 7/13/96.
\52\ National Journal, 7/13/96.
\53\ National Journal, 7/13/96.
\54\ See Chapter 11.
\55\ Letter to Majority Chief Counsel, from Thomas Wilson, Council
for Women for Tax Reform, regarding WTR's response to the Committee's
subpoena, 10/2/97.
\56\ Washington Post, 12/10/96.
\57\ New York Times, 3/1/95.
\58\ Associated Press, 6/21/95.
\59\ Letter to Majority and Minority Chief Counsels from the
Association of Trial Lawyers of America, Christian Coalition, Citizen
Action, Citizens Against Government Waste, International Brotherhood of
Teamsters, National Council of Senior Citizens, and National Right to
Life Committee declaring their objections to subpoenas issued by the
Committee, 9/3/97.
\60\ Letter to Majority and Minority Chief Counsels from the
Association of Trial Lawyers of America, Christian Coalition, Citizen
Action, Citizens Against Government Waste, International Brotherhood of
Teamsters, National Council of Senior Citizens, and National Right to
Life Committee declaring their objections to subpoenas issued by the
Committee, 9/3/97.
\61\ Letter to Minority Counsel from Kenneth A. Gross of Skadden
Arps, attorney for DeLuca Liquor & Wine, Ltd., in response to subpoena,
8/21/97.
\62\ Such information is requested in subpoenas to Vote Now (#282),
the National Council of Senior Citizens (#285), Sierra Club (#287),
Democratic Leadership Council (#289), and National Committee for an
Effective Congress (#291).
\63\ See United States v. Davis, U.S.D.C., S.D.N.Y.
\64\ Letter to Majority and Minority Chief Counsels from the
Association of Trial Lawyers of America, Christian Coalition, Citizen
Action, Citizens Against Government Waste, International Brotherhood of
Teamsters, National Council of Senior Citizens, and National Right to
Life Committee declaring their objections to subpoenas issued by the
Committee, 9/3/97.
\65\ Letter to Majority and Minority Chief Counsels from the
Association of Trial Lawyers of America, Christian Coalition, Citizen
Action, Citizens Against Government Waste, International Brotherhood of
Teamsters, National Council of Senior Citizens, and National Right to
Life Committee declaring their objections to subpoenas issued by the
Committee, 9/3/97.
\66\ Letter to James Brown and Pam Marple from Richard Wilkof,
Counsel for NEA, regarding National Education Association's response to
the subpoena, 8/11/97.
\67\ Letter to Senators Thompson and Glenn from Robert Chanin,
General Counsel for NEA, regarding National Education Association's
response to the subpoena, 8/20/97.
\68\ Washington Post, 11/22/97.
\69\ Hugh Westbrook deposition, 9/29/97, p. 13.
\70\ New York Times, 9/20/97.
\71\ Subpoena for Vote Now, #282.
\72\ Former Vote Now 96' Executive Director Gary Barron was deposed
by the Committee on September 30. Hugh Westbrook, former chairman of
the organization, was deposed by the Committee on September 29. Mention
of this organization and its ties to Meddoff, organized labor, and the
DNC also appears in sworn deposition testimony of Harold Ickes, Warren
Meddoff, Karen Hancox, Richard Sullivan, Marvin Rosen, Mark Thomann,
and Donald Fowler. Information linking Vote Now 96' to the Judith
Vasquez contribution appears in the deposition testimony of Noah
Novorodsky, a summer associate at the law firm at Jackson, Tufts, Cole
& Black, the firm that represented Vasquez, and the interview of Twyla
Foster, a partner at the same firm that supervised Novorodsky. Both
were involved in the transaction.
\73\ Gary Barron deposition, 9/30/97, pp. 26-27.
\74\ The Annenberg Public Policy Center, ``Issue Advocacy During
the 1996 Campaign: A Catalogue,'' 9/16/97.
\75\ National Journal, 7/1/95.
\76\ Letter to Majority and Minority Chief Counsels from the
Association of Trial Lawyers of America, Christian Coalition, Citizen
Action, Citizens Against Government Waste, International Brotherhood of
Teamsters, National Council of Senior Citizens, and National Right to
Life Committee declaring their objections to subpoenas issued by the
Committee, 9/3/97.
\77\ Richmond Times Dispatch, 7/3/97.
\78\ Senator Lieberman, 10/7/97, Hrg. p. 41.
\79\ Senator Thompson, 10/9/97, Hrg., p. 196.
\80\ Senator Thompson, 10/7/97, Hrg., p. 4.
\81\ Senator Thompson, 10/8/97, Hrg., p. 65.
\82\ Senator Glenn, 10/8/97, Hrg., p. 73.
PART 7 INVESTIGATION PROCESSES
Chapter 42: White House Production Issues
Over the course of the Investigation, the Committee
subpoenaed or voluntarily requested documents from over 200
groups and individuals. The greatest number of formal and
informal requests for documents were directed to the White
House. Over 120,000 documents were produced by the White House,
many of which shed important light on the fundraising practices
being examined by the Committee. Over the course of the
Committee's investigation, however, the White House came under
frequent criticism for belatedly responding to requests for
documents. In some of these instances, it was suggested that
the White House's tardy productions compromised the
effectiveness of the Committee's investigation. Some members of
the Majority went further and suggested that the White House
Counsel's office was deliberately obstructing the work of the
Committee. These frustrations reached a head in July 1997 when
the White House failed to produce entry records relating to Ng
Lap Seng prior to Committee hearings concerning his access to
the White House. In response, the Committee issued a subpoena
to the White House.
In early October, the White House produced to the Committee
and the Department of Justice numerous videotapes and audio
recordings of Presidential events, including videotape footage
of the opening minutes of 44 White House coffees. Materials
relevant to these coffees, including videotapes, had been
requested earlier by the Committee in April 1997. The belated
production raised concerns about the effectiveness of the White
House's document production procedures and prompted allegations
by some members of the Majority that the White House had
deliberately sought to conceal the existence of these
materials. The Committee devoted two days of hearings to these
matters in an attempt to resolve the issue of whether the White
House counsel's office intentionally delayed the production of
responsive videotapes to the Committee.
FINDINGS
(1) The White House Counsel's Office took appropriate and
reasonable steps to discover the existence of responsive
videotapes in response to the Committee's April 1997 document
request. There is no evidence before the Committee to suggest
that the White House Counsel's Office intended to obstruct the
work of the Committee.
(2) The evidence before the Committee is conclusive, based
on exhaustive technical analysis, that none of the videotapes
or audiotapes produced by the White House to the Committee have
been altered in any way.
OVERVIEW
Staff members of the Committee's Special Investigation
first met with staff members of the White House Counsel's
Office in February 1997. Most issues of how documents would be
produced and stored were quickly resolved, and the White House
made it clear from the outset that it would respond to document
requests made by the Committee voluntarily, obviating the need
for a subpoena. On April 9, 1997, the first formal document
request was issued by the Majority.1 Although the
request was reduced to 28 line-items, it required a search of
all White House records for references to over 50 separate
individuals and organizations.
---------------------------------------------------------------------------
Footnotes appear at end of Chapter 42.
---------------------------------------------------------------------------
On May 21, 1997, the Majority issued a second formal
request for documents.2 This request consisted of 42
line-items, one of which required a search for all documents
referring to 61 individuals and entities. Two supplemental
requests for additional materials were made on June 9, and June
11, 1997.3 Over 100,000 pages of materials were
delivered to the Committee in response to these
requests.4 In addition to its formal requests, the
Committee made at least 200 additional, but informal requests,
to the White House, leading Committee and White House staff to
be in daily contact. The White House chief counsel, Charles
Ruff, offered his personal assurance that the ``White House
w[ould] continue its efforts to honor the Committee's requests
for information,'' and pledged continued timely production of
all information requests as well as prompt responses to the
many informal requests which were being made since early April
by the Majority almost daily.5
On July 31, 1997, prompted by concerns arising out of the
belated production of records relating to access to the White
House by Charlie Trie's associate, Ng Lap Seng (see below, ``Ng
Lap Seng's WAVE Records''), the Committee unanimously voted to
issue a subpoena repeating previous requests for production and
seeking numerous additional documents relating to many
specified individuals and entities.6 Despite the
burdensomeness of the search required by the subpoena, the
response date was set for August 12. As the White House worked
to respond to the subpoena, the Majority sent a ``supplementary
request'' for additional documents on August 18,
1997.7
On October 2, the White House Counsel's office advised the
Committee that the existence of videotapes containing material
responsive to several of the Committee's information requests,
including the initial April 28 request, had been discovered. By
October 4, the Committee was provided with videotapes of the
opening minutes of 44 coffees held at the White House. The
Committee subsequently received over 100 additional videotapes
of White House events and events outside the White House
attended by President Clinton which were responsive to the
Committee's prior requests. The circumstances of this belated
discovery and production of responsive materials focused
intense scrutiny on both the White House Counsel's Office and
the organization that created and maintained these videotapes:
the White House Communications Agency (``WHCA'').
VIDEO AND AUDIO TAPING IN THE WHITE HOUSE
The White House Communications Agency (``WHCA'') is funded
by the Department of Defense and staffed by career military
personnel. Its primary mission is to provide communications
support to the president in his official capacity.8
WHCA performs a number of services in this regard, from
ensuring that the President has secure lines of communication
while travelling, to supplying Secret Service agents with
wireless communications equipment. The WHCA staff, numbering
approximately 850 individuals, is primarily located at the
Anacostia Naval Air Station in Washington, D.C.
An important, but relatively small, aspect of WHCA's
operations is the video and audio recording of the president's
constitutional, statutory and ceremonial duties pursuant to the
Presidential Records Act, 44 U.S.C. Sec. 2201-07.9
Photographic support has been provided to the Office of the
President since 1949.10 The exact nature and scope
of this support has varied over the years, but since 1960, a
military film crew has been responsible for the official film
or videotape record of each presidency.11
A wide variety of events are videotaped by WHCA, including
speeches, public addresses, meetings with Cabinet members, and
foreign dignitaries, the president's weekly radio address,
official phone calls, media interviews, holiday receptions,
receiving lines, bill signings, and as much of the president's
personal life as he desires.12 The range of events
at which presidential remarks would be audiotaped by WHCA is
somewhat more circumscribed, consisting almost entirely of more
formal events where the press is already present and the
president requires a microphone for amplification of his
remarks (the WHCA tape recording is made through a control box
connected to the president's microphone in these
situations).13 Shortly after the audio or video
recordings are made, they are catalogued and delivered to the
National Archives, which stores them pending the establishment
of a presidential library.14
WHITE HOUSE COMMUNICATION AGENCY
The Committee sought an understanding of why certain
Presidential events are videotaped in their entirety, some for
only a few minutes, and some not at all. Specifically, the
Majority speculated that the abbreviated nature of the
``coffee'' videotapes was the result of politically motivated
instructions given by members of the president's staff. Based
on the uncontradicted testimony of both WHCA career military
personnel and White House staff members, the Committee found
that the decisions concerning the scope of WHCA's videotaping
activities were non-political in nature and consistent with the
practices of past administrations.
The Committee deposed White House staff member Steve
Goodin, who has worked as a special assistant to the staff
secretary since late 1994.15 His responsibilities
include interacting with the WHCA videotape camera crew on a
daily basis and instructing them about the extent to which the
president's activities will be videotaped each
day.16 In making these decisions, Goodin relies on
four criteria: (i) the inherent historical value of the event,
e.g. bill-signings; (ii) the potential for future historic
value, such as a meeting with youth groups; (iii) the degree to
which videotaping would help to present ``a historical snapshot
of what the president's day is like'; and (iv) the level of
intrusiveness involved in having the videotape crew
present.17 Goodin also acknowledged that he probably
would have asked WHCA personnel about their past videotaping
practices.18 Over time, as Goodin and WHCA personnel
worked together on a daily basis, they acquired a mutual
understanding about the desired extent of videotape coverage
forparticular kinds of events, thereby making it unnecessary
for Goodin to explicitly direct them with respect to each event.
Instead, WHCA personnel would make assumptions about the desired extent
of videotape coverage based on the nature of the event.19 As
WHCA Director of Operations Steve Smith put it, ``they can tell by type
of events, like recurring events, routine events.'' 20 For
example, Goodin expected that WHCA personnel would generally tape all
events where the press was already present, such as press conferences,
but because the WHCA video crew would be situated with numerous other
cameramen from the media, he could not state definitively that WHCA was
always present at such events.21 In general, Goodin asked
them to tape the President's remarks at all public events, all events
open to the press, and larger meetings where the president was
scheduled to make remarks.22
VIDEOTAPE PROCEDURES FOR COFFEES
For events such as coffees, Goodin would instruct WHCA
personnel to ``take the top'' or ``take a spray'' of the
coffee, meaning that the video crew would follow the president
into the room, stay long enough for him to greet everyone in
the room and to take his seat at the table and then exit the
room so the meeting could begin.23 Goodin did not
make discretionary determinations about the scope of videotape
coverage for each individual coffee.24 With respect
to small, closed-press meetings like coffees, Chief McGrath,
head of WCHA's Videotaping Unit, explained that ``it is not
that Steve Goodin necessarily decides top of or not. We all
sort of know from past . . . we can read the schedule and have
a feel for whether it's the top of or whether it's the whole
thing.'' 25 WHCA videotaped only ``the top'' of
numerous other events at the White House besides coffees, such
as Cabinet meetings or bipartisan meetings of members of
Congress in the Cabinet Room.26 The basic
considerations underlying the decision not to tape such small,
closed-press meetings in their entirety were the physical
intrusiveness of having a videotape crew present in such small
gatherings and the absence of scheduled, formal remarks.
Goodin testified that space limitations in the Map Room,
where most of the coffees were held, were one factor in the
decision to only ``take the top'' of the coffees.27
McGrath confirmed that the Map Room ``doesn't have a whole lot
of room . . . we were sort of intrusive.'' 28
In addition, it has been WHCA's long-standing practice not
to videotape entire closed-press meetings where the president
is not scheduled to make formal remarks. Although President
Clinton spoke with coffee attendees, Goodin testified that such
informal remarks were distinguishable from fundraisers that
were videotaped in their entirety since ``he's not going to
stand up and deliver a speech.'' 29 McGrath
confirmed that ``if the President is going to make remarks,
we're going to be there for the whole thing, but remarks are
different than meetings.'' 30 WHCA's Steve Smith
testified that it has been the consistent practice since at
least the Bush Administration to only videotape the beginning
of an event that is closed to the press and for which no audio
support has been requested (i.e., no lectern, no microphone, no
amplification).31
More importantly, Goodin was never instructed by the
president or by other members of the White House staff
concerning the extent to which coffees or other events should
be videotaped.32 McGrath explained that Goodin's
instructions to the videotape crew were limited to the
commencement and termination of videotaping 33 and
never included specific directions about what should or should
not be filmed during a particular event. ``[I]t is strictly
left up to the videographer to do the best he can to document
what the president is saying, and that's it. There's no design.
. . . There's no direction along those lines.'' 34
Smith further explained that, consistent with the archival
nature of WHCA's videotaping, any footage taken of attendees at
White House events was entirely incidental. ``Their focus is
the presidency, not . . . who he was having meetings with or
whatever. They just don't do that.'' 35
Goodin also testified that private meetings between the
president and his staff were not typically
videotaped.36 As a result, such staff members would
not be aware of the extent of WHCA's videotaping activities
except to the extent they attended events videotaped by
WHCA.37
THE INITIAL FAILURE TO IDENTIFY RESPONSIVE VIDEOTAPES
Chairman Thompson summarized the evidence accurately with
respect to why responsive videotapes were not discovered in
response to the Committee's original request for production.
``We learned from the people at WHCA what happened in April.
Basically, they received the so-called Ruff directive that
[White House Counsel] Ruff prepared, and that somewhere between
the Military Office and the White House and the WHCA people,
the page that delineated fund-raisers and coffees got lost.''
38 The Committee's investigation fully confirmed
White House Counsel Lanny Breuer's assessment that the primary
reason for the belated production was ``a slipup of the most
routine and the most innocent sort . . . the kind of mistake
that happens every day in complicated litigation throughout the
nation.'' 39
On April 9, 1997, Majority Counsel sent to White House
Counsel Lanny Breuer 28 separate requests for production of
documents from the White House, including any materials related
to three specified coffees.40 Pursuant to this
request, and several others from other investigations, White
House Counsel Charles Ruff issued a four-page memo to the
employees of the Executive Office of the President asking them
``to conduct a thorough and complete search of ALL of your
records (whether in hard copy, computer, or other form) . . .
for materials responsive to the requests below.'' 41
The second page of the memorandum consisted of five numbered
paragraphs, each with at least one subpart, containing specific
document requests, including a request for all documents
``referring or relating to White House coffees.'' 42
In addition, the first paragraph asked for the production of
documents ``referring or relating to any of the individuals or
entities on Attachment A,'' which listed 99 individuals and
entities on the last two pages of the Ruff memo.43
The Committee took deposition testimony from Alan P.
Sullivan, director of the White House Military Office
(``WHMO''). Sullivan has headed the WHMO since November 1994,
prior to which time he was a colonel in the Marine
Corps.44 There are ten operating components of the
WHMO (including for example, Air Force One, Camp David, and
WHCA) and a combined staff of approximately 1800
personnel.45 Sullivan recalled receiving the Ruff
memo and processing it exactly as the office had processed
numerous other document requests from the White House Counsel's
Office: ``disseminate it [the request] to each of the 10
operating units, request them to do a file search, respond to
us in time so we could formulate a consolidated response to
counsel by the due date.'' 46 According to the WHMO
staffer who faxed the memos to the operational units, the Ruff
memo was scanned by the fax machine just once and then pre-
programmed to transmit to each of the WHMO command units
directly from memory.47 Four of these operational
units--the Air Operations, U.S. Army Transportation Agency, Air
Force One, and the Presidential Contingency Planning unit--were
able to locate in their files a complete copy of the four-page
Ruff memo faxed to them by WHMO. According to the fax-generated
header information on each page, these fax transmissions
occurred within less than an hour, further supporting the
testimony that the Ruff memo was faxed in its entirety to WHCA
at the same time it was faxed to other operational units. Five
of the other operational units did not retain copies of the
original fax transmission from WHMO.48
The WHCA official responsible for receiving and processing
the document requests faxed from the White House Military
Office was Colonel Charles Campbell, deputy commander of WHCA,
who is now serving his second tour of duty in WHCA having
previously served (in a different capacity) from 1986 to 1989
under the Reagan and Bush administrations.49
Campbell testified that he recalled receiving a fax from the
White House Military Office forwarding the April 28 Ruff memo.
This document was placed on his desk by one of the four staff
sergeants who constitute his administrative staff. He recalls
seeing the first page of the Ruff memo and the two-page
attachment, but not the second page, which contained the five
numbered requests, including the request for documents related
to ``coffees.'' Asked to explain the missing second page,
Campbell speculated that it had been lost or missorted with
other fax traffic before it arrived on his desk.50
Three of the four people working on the administrative staff in
April 1997 subsequently left WHCA.51 Campbell
questioned the remaining individual about the missing fax page,
but the individual had no recollection of the
document.52 Campbell also defended his staff: ``Our
administrative section is a hard-working group of young people.
They process a lot of paperwork and do a lot of typing and that
sort of thing. They do a very good job in support of [WHCA
commander] Colonel Simmons and me. They're soldiers, airmen,
and, you know, mistakes are made. And I don't know where this
second page was mishandled. . . . But I don't believe that any
of these administrative people did any intentional mishandling
or held anything back from me regarding that April 29th package
from the Military Office, which included the 28 April memo from
the Counsel's office.'' 53
Campbell's explanation that he had a good-faith belief that
he had a complete copy of the fax despite the fact that a page
was missing, was convincing. The first page of the Ruff memo
specifically referred to Attachment A, by instructing
recipients as follows: ``Because this has been an ongoing
process, some of the names listed on Attachment A are similar
or identical to previous requests. Therefore, if you are
certain that you have previously provided a document in
response to a Counsel's Office request, please do not provide
it again.'' 54 The first page of the Ruff memo,
however, made no reference to the requests contained in the
five numbered paragraphs on the second page, leading Campbell
to believe that the request related entirely to the names
contained in Attachment A. Indeed, previous requests in
December 1996 and January 1997 from the White House Counsel's
Office had consisted entirely of lists of names. Moreover, the
first page is self-contained, ending with a concluding paragraph and
providing no clue that there is a second page. Campbell reasonably
concluded that WHCA had been asked only to search for all documents
related to the names appearing on Attachment A.
Campbell distributed the request by scanning Attachment A
into his computer system to create a WordPerfect file and
attaching the resulting document to an e-mail message that he
sent to all WHCA personnel. The e-mail message summarized the
first page of the Ruff memo and directed WHCA personnel to
respond to the counsel's request with ``a thorough search of
all records (regardless of media) on file that were created
from 20 Jan 93 to present relating to certain individuals and
entities. They are listed on the 3-page attachment to this
note.'' 55 Campbell expected the video and audio
tape databases to be searched pursuant to this request and, in
fact, they were searched.56 The databases, however,
are not indexed according to the names of individuals present
at the recorded events. As a result, these searches failed to
identify any responsive video or audio tapes.
WHITE HOUSE DEFINITION OF DOCUMENT
During the October 29th hearing, the Majority spent a great
deal of time criticizing White House counsel for directing the
White House staff, through the April 28 Ruff memo, to search
``ALL of your records (whether in hard copy, computer, or other
form) . . . for materials responsive to the requests below.''
The Majority argued that White House counsel may have intended
to obstruct the Committee's investigation because the Ruff memo
failed to forward the following lengthy definition of
``document,'' contained in the Committee's April 9 document
request, to White House staff:
The term ``document'' means any written, recorded, or
graphic matter of any nature whatsoever, regardless of
how recorded, and whether original or copy, including
but not limited to the following: memoranda, reports,
expense reports, books, manuals, instructions,
financial reports, working papers, records, notes,
letters, notices, telegrams, receipts, interoffice and
intra office communications, electronic mail (E-mail),
contracts, notations of any type of conversation,
telephone call, meeting or other communication,
bulletins, printed matters, computer printouts,
teletypes, invoices, transcripts, diaries, analyses,
summaries, minutes, bills, accounts, projections,
comparisons, messages, correspondence, press releases,
financial statements, opinions, and investigations,
(and all drafts, preliminary versions, alterations,
modifications, revisions, changes, and amendments of
any of the foregoing, as well as any attachments or
appendices thereto), and graphic or oral records or
representations of any kind (including, without
limitation, photographs, charts, graphs, microfiche,
microfilm, videotape, compact discs, tape recordings
and motion pictures), and electronic, mechanical, and
electric records and representations of any
kind.57
During both his deposition and his hearing testimony, Breuer
explained that condensing this densely-worded, labyrinthine
definition into a simple direction to search ``ALL records
(whether in hard copy, computer or other form)'' was intended
to ensure the fullest possible response from the numerous
offices that make up the Executive Office of the President.
``The reason is that the more complicated the definition, the
more difficult it is for people who are not lawyers to
understand the definition and to find responsive materials . .
. [B]y saying we want all documents in whatever form, that is
intended to be the most reasonable way of capturing such a long
definition.'' 58
Further complicating the task of the White House was that
the Ruff memo was an attempt to search for documents responsive
to requests from both this Committee and other investigations,
each of which promulgated its own definition of ``document.''
As Breuer explained in his deposition, ``if I were to include
your definition, then I would have to also include the House
definition and the Justice Department definition. . . . I can't
just sort of pick and choose.'' 59 Taking the
Majority's position to its logical extreme, the boilerplate
definitions of ``document'' generated by each entity requesting
documents from the White House should have been distributed to
White House staff in their entirety--a result that would appear
to guarantee confusion.
The Majority's implied premise that the scope of the
document production from the White House turned on sharing the
Majority's exact definitional language with the entire White
House staff is untenable. For example, WHCA personnel produced
six responsive classified cables in response to the Committee's
April 9 request. The Committee, however, did not specifically
define ``document'' to include ``cables'' until the July 31
subpoena was issued. The language of the Ruff memo was adequate
to identify and secure the production of a broader range of
responsive documents than those specifically identified in the
Committee's April 9 request, despite that request's lengthy
definition of ``document.'' Given this result, it is difficult
to credit the suggestion that the White House Counsel's failure
to forward the Committee's definition of document to all White
House staff was motivated by a desire to obstruct the
Committee's investigation. Breuer persuasively testified that
``people, when they are looking for responsive material, don't
parse definitions, and 13-lined definitions are not
particularly helpful to them.'' 60
The White House counsel's rewording of the Committee's
definition was not only reasonable as a general principle, but
was demonstrably adequate to identify the existence of
responsive videotapes. The omission of the specific term
``videotape'' was of no moment in light of the fact that WHCA
did not retain the videotapes themselves, but transmitted them
to the National Archives. The only records, therefore, of the
existence of responsive videotapes, was contained in WHCA's
computer databases, a form of record specifically identified by
the Ruff memo's directive to search ``ALL records (whether in
hard copy, computer or other form).'' Moreover, in response to
the Ruff memo's directive, WHCA personnel did, in fact, search
the videotape and audiotape databases for responsive materials.
No responsive materials were identified at that time because of
the way the databases were organized.
Col. Campbell, and other WHCA personnel who were deposed,
were clear that if they had seen the second page of the Ruff
memo, responsive materials would have been identified and
produced. The critical word which would have elicited a
response--``coffees''--appeared on page two of the Ruff memo.
Col. Campbell testified that he would have scanned the second
page of the Ruff memo into his computer system, as he did with
Attachment A, and e-mailed it to the WHCA
personnel.61 In addition, due to the different
nature of the requests on page two, keyed as they were to
categories of events rather than specific names, Col. Campbell
testified that he would have initiated discussions with the
responsible persons in the Audiovisual Unit to assess the
existence of responsive materials.62 Likewise, Chief
McGrath, the person actually responsible for querying the
videotape databases in response to the Ruff memo, testified
that if he had seen the second page of the Ruff memo, he would
have queried the database on ``coffees,'' identified responsive
materials, and had discussions with his superiors about which
of the resulting ``coffee tapes'' were being requested by the
Counsel's office.63 The evidence is clear that, but
for the unintentional mishandling of page two of the Ruff memo
by the career military personnel in the White House
Communications Agency, the White House Counsel's document
search procedures were adequate to identify the existence of
responsive videotapes.
The Majority contended that the testimony of WHCA Director
of Operations Steve Smith established that the White House
counsel's condensation of the various Committee document
requests concerning ``coffees'' was inadequate, assuming the
second page of the Ruff memo had been distributed to WHCA
personnel, to elicit the production of responsive
videotapes.64 This was a distortion of Smith's
testimony. Smith simply testified that if he had received the
second page of the Ruff memo in the spring of 1997, he would
not have thought about identifying responsive videotapes
because the audio-visual unit was not his responsibility at
that time. ``At the time I was in the Operations Division, not
in the operational chain of command at the audiovisual unit. In
the context of the tasking I got, I was thinking of documents
in the true sense as file-type copies. Had I gotten this second
page with the word ``coffee'' in it, it would have meant
nothing to me at the time.'' 65
white house search procedures
The Majority's criticisms of the White House production
effort must be viewed in the context of the size of the task
confronting the White House staff. This Committee alone
forwarded over 280 formal and informal requests for documents
to the White House and received 120,000 pages of documents in
response.66 These documents frequently required
time-consuming pre-production review to protect against the
disclosure of personal, confidential or classified information.
White House counsel Breuer made the point that the Committee's
document production priorities would frequently shift along
with the Committee's plans for who would be deposed or be
called to testify on a given day.67 Breuer further
explained that these last-minute requests frequently resulted
in last-minute or belated productions of relevant
materials.68 The Minority's own experience during
the life of this Committee confirms Breuer's observation that
numerous depositions of White House personnel were taken with
very little advance notice and that decisions on who would
testify on any given hearing day were frequently not stated
until the preceding day.
Breuer testified that White House counsel took reasonable
steps to respond to all document requests, including: (i)
issuing directives to the employees of the Executive Office of
the President to search their files for relevant materials;
(ii) designating members of the White House Counsel's office as
available contact persons to answer any questions arising from
the search directives; (iii) personally visiting and assisting
in the search of offices which were most likely to have
responsive materials pertaining to a specific request; and (iv)
maintaining open lines of communication with Committee counsel
to permit them to prioritize their document requests and to
keep them informed as to the progress of the document
production process.69
The Majority argued that White House counsel acted in bad
faith by failing initially to interview WHCA personnel about
the possible existence of videotapes of coffees and other White
House events.70 As Breuer testified, however, the
possible existence of videotapes was not an issue raised by the
Committee until the inquiries from Majority Counsel Bucklin in
August 1997. ``I think it's a fiction, Mr. Madigan, in all due
respect, to say that there was some remarkable concern back in
April about videotapes or recordings as much as some may think
there was.'' 71 It is difficult to fault the White
House Counsel's office in this regard given that the Committee
itself, in its numerous depositions of individuals who attended
the coffees, never once inquired of any of these witnesses
about the presence of audio or videotaping
equipment.72
white house responses to committee inquiries about videotapes
On August 7, at the end of a meeting attended by White
House counsels Lanny Breuer and Michael Imbroscio, Majority
Counsel Bucklin and Minority Counsel, Bucklin took Imbroscio
aside (after all other attendess had departed) and told him
that he had information, the reliability of which he could not
attest to, that all meetings in the Oval Office were
surreptitiously taped either by videotape or
audiotape.73 Imbroscio was skeptical, but agreed to
look into the issue.74 This conversation, which
lasted less than two minutes, left Imbroscio with the
impression that Bucklin was asking him to look into whether
there was clandestine taping in the Oval Office.75
Bucklin did not mention the White House Communications Agency
by name, but he did indicate that a ``unit of the Department of
Defense'' might be responsible for the
videotaping.76 Bucklin did not request an immediate
response or otherwise indicate that this was a priority
request.77 Either that day or the following day,
Imbroscio reported Bucklin's inquiry to Breuer, who confirmed
in his deposition testimony that he understood Bucklin's
initial inquiry to concern the possibility of clandestine
taping in the Oval Office.78 Breuer, while also
expressing skepticism, instructed Imbroscio to follow up on the
matter.79 Sometime during the following week,
Imbroscio also informed Chief White House Counsel Ruff about
Bucklin's inquiry concerning clandestine taping.80
Eleven days later, Bucklin sent a letter to Breuer raising
several issues, including a complaint about the lack of
response to Bucklin's verbal inquiry of August 7. To the best
of Imbroscio's recollection, Bucklin's August 19 letter
inaccurately describes parts of their August 7
conversation.81 Specifically, Bucklin's letter
claimed that he had asked Imbroscio to ascertain immediately
whether the entity which provided audio and visual taping
services to the White House, which Bucklin identified in this
letter for the first time as the White House Communications
Agency, would require a separate subpoena in light of the fact
that it was part of the Department of Defense.82
Imbroscio has no recollection that this issue arose during
their August 7 colloquy or that Bucklin had asked for an
immediate response to any request he had made of Imbroscio at
that meeting.83 In addition, Bucklin's letter now
characterized the audio and video taping as ``routine,'' rather
than the clandestine taping that was the subject of the initial
inquiry.84 In light of these differing
recollections, the Minority proposed that Majority Counsel
Bucklin be deposed concerning his initial inquiry to Imbroscio,
but this request was rejected by the Majority.
Although taken aback by the inaccuracies in the letter,
Imbroscio was entirely willing to address this somewhat broader
request for information about video and audio taping activities
within the White House.85 The specific subject of
videotapes of ``coffees,'' however, was not raised either by
this letter or in the contemporaneous discussions that Bucklin
had with Imbroscio.86 Moreover, Bucklin's inquiry
was only one of numerous requests to the White House that the
Committee was pressing. Most significant of these was the
Committee's desire for prompt action on its August 1 subpoena
to the White House, which consisted of 29 subparts and
requested information on over 50 individuals and
entities.87 In addition, in the two months from the
August 1 subpoena through the end of September, the Committee
presented approximately 20 formal and informal requests for
information to the White House.88 During this same
time period, from August through September, approximately
18,000 pages of documents were produced by the White House to
the Committee.89
In order to respond to Bucklin's inquiry, Imbroscio
personally visited the only WHCA office listed in the White
House phone book--the office that provides pagers to White
House personnel--and secured the name of WHCA Director of
Operations Steven Smith.90 Imbroscio made an
appointment to meet with Smith on August 29.91 Smith
and Imbroscio have differing recollections of this discussion,
but both agree that the topic of clandestine taping was raised
by Imbroscio and quickly dismissed by Smith.92 Both
men also agree that Imbroscio asked in general about the kinds
of events for which WHCA provided video and audio support and
that Smith advised Imbroscio that WHCA would typically film
political fund-raisers attended by the President off the White
House grounds.
Imbroscio also asked Smith whether WHCA would film small,
private meetings in the Oval Office or the Map Room. He recalls
Smith advising him that such ``closed'' events (a term of art
used by WHCA to designate meetings closed to the public and the
press) would not typically be filmed.93 Smith, on
the other hand, recalls informing Imbroscio that ``it is very
normal for us to be there video-wise for a closed press
event.'' 94 Smith volunteered that Imbroscio's
differing recollection may have resulted from confusing WHCA's
video support with its audio support, which would not
ordinarily be provided to a ``closed press'' meeting. Smith
testified: ``What I told him--and this is what I think got
confused or . . . miscommunicated or understood or whatever it
was the audio piece. I told him, that is, that we would not be
there for a closed press, private-meeting type audio. We just
don't do that . . . I suspect he got that all confused. There
was a lot of information that went across the table to him, he
and I, over a . . . 20-30 minute period. . . . He looked kind
of glazed over. I mean, that's my personal opinion. I thought
he was overwhelmed with information.'' 95
Imbroscio left the meeting with the understanding that
Smith would inquire into the existence of a comprehensive log
of videotaped and audiotaped events that Imbroscio could
review.96 Majority Counsel Bucklin, prompted by a
September 3 story appearing in the Washington Post, made
another inquiry concerning WHCA, asking Imbroscio to determine
whether WHCA kept a log of vice-presidential phone calls.
Unlike the possible existence of videotapes, Bucklin placed a
high priority on receiving a prompt response to this inquiry.
On September 9, at a meeting with Majority and Minority
Counsel, Imbroscio reported on his meeting with Smith.
Specifically, Imbroscio related that there was no clandestine
taping in the White House, that the president's remarks at
political fund-raisers were videotaped, but that it was his
understanding that closed-press events would not be videotaped.
However, Imbroscio also said that he had asked Smith to get
back to him about the existence of a log of videotaped and
audiotape events, that he would inquire further on the issue of
such videotapes by reviewing the log, and committed to provide
the Committee with access to such a log when it was
located.97 Imbroscio's testimony during the hearing
was extremely clear on this point: ``I said very clearly there
were videotapes of fund-raising events and that--but to my
understanding there were not videotapes of coffees, but that I
would inquire further. . . . I did not have complete confidence
that Mr. Smith knew precisely on a day-to-day basis what WHCA
did, and so that is why I couched it in the terms I did, which
is my understanding they were not filmed, but I wanted to
satisfy myself on a first-hand basis whether or not they, in
fact, existed.'' 98 Imbroscio also reported on his
findings concerning the possible existence of a log of vice-
presidential phone calls. It bears noting that, although the
Majority was informed on September 9 that videotapes of fund-
raisers existed, they made no immediate demand for expedited
production of these tapes. Ultimately, these videotapes of
public fund-raisers constituted the vast majority of the
videotapes responsive to the Majority's request and produced to
the Committee.
The final sequence of events leading to the discovery of
the videotapes began on September 25, when Imbroscio contacted
Smith again to discuss both the videotape/audiotape logs and a
lingering issue concerning the vice-presidential phone
calls.99 Smith informed Imbroscio that a paper or
``hard-copy'' log did not exist, and that all available
information on the video and audio tapes was stored in computer
databases. At Imbroscio's request, Smith had his staff prepare
a description of the data fields for both the video and audio
databases.100 On Friday, September 26, this document
was delivered to Imbroscio's office just before noon and
reviewed briefly by him before he left at noon to visit family
in North Carolina.101 Upon his return to the office
on Monday, September 29, Imbroscio began exchanging phone calls
with Mr. Smith and arranged another meeting with him on
Wednesday, October 1, to which Imbroscio brought a notepad with
information concerning several of the specific events
identified by the Committee.102 [Smith recalls his
initial meeting with Imbroscio occurring on September 30, but
their accounts are otherwise substantially similar.] Smith
arranged for Imbroscio to meet with Chief McGrath of the Audio/
Visual unit in order to permit Imbroscio to actually query the
relevant databases.103
During his meeting with Chief McGrath at 2:00 p.m. that
afternoon (both Smith and Imbroscio agree that this meeting
occurred on October 1), Imbroscio learned that there were two
separate video databases. One was a database of events recorded
in their entirety with only one event recorded per
videotape.104 The other databases, referred to as a
photo-op databases, contained footage of events for which only
the first few minutes had been recorded.105 A week's
worth of these events would be recorded on a single videotape,
with the result being that these tapes were listed with date
ranges, rather than specific dates.106 Imbroscio
queried the databases and ascertained that at least some of the
coffees had been partially videotaped.107 By his own
account, Imbroscio was ``surprised'' and ``stunned'' by this
discovery.108 Chief McGrath confirmed in his
testimony to the Committee that upon making this discovery,
Imbroscio expressed shock and surprise.
Imbroscio asked that the videotapes identified by his
search be retrieved from the National Archives so that he could
review their contents. Imbroscio then informed Breuer, who was
preparing to leave the office for Rosh Hashanah, that
responsive videotapes of some coffees existed. Breuer
instructed Imbroscio to find out everything he could. That same
evening, Imbroscio reviewed the five or six tapes that Chief
McGrath had successfully retrieved from the National Archives.
Before leaving for the evening, Imbroscio left a voice-mail
message with Majority Counsel Bucklin which, among other
things, alerted Bucklin that Imbroscio had an updated status
report on the WHCA issues.109 Imbroscio and Bucklin
finally spoke the next day at approximately 4:30 p.m., at which
time Imbroscio informed him that, contrary to his prior
understanding, there appeared to be approximately 30-40 partial
videotapes of White House coffees and, consistent with his
previous reports to Bucklin, approximately 100 videotapes of
fund-raisers.110 By Saturday, October 4, video
footage of 44 White House coffees had been produced to the
Committee.111 By the following Tuesday and
Wednesday, October 7th and 8th, The White House delivered an
additional 66 DNC-related videotapes, as well as audiotapes, to
the Committee.112
NOTIFYING THE DEPARTMENT OF JUSTICE OF THE EXISTENCE OF RESPONSIVE
VIDEOTAPES
The White House Counsel's Office has been criticized for
failing to communicate its discovery of responsive videotapes
to the Department of Justice until October 4. This was one day
after the Department issued a response to Rep. Hyde, Chairman
of the House Judiciary Committee, declining to initiate a
preliminary investigation under the Independent Counsel Act.
Rep. Hyde's request for an investigation had raised a range of
issues relating to alleged illegal activity by both President
Clinton and Vice-President Gore, including issues involving
White House ``coffees.'' Both Ruff and Breuer acknowledged that
the two-day delay in notifying the Department of Justice was
unfortunate, but the record shows that this delay was not
willful and did not impede the Department's campaign finance
investigation in any material respect.
Ruff met with the Attorney General on Thursday, October 2,
as he does every Thursday, to discuss legislation, policy,
appointment issues and other issues of mutual
concern.113 Both parties, however, treat
investigative matters regarding the White House as off-limits.
Ruff testified that ``[T]he one rule we have, not only in those
meetings but across the board in my relations with the Attorney
General, is we do not talk about investigative matters at all.
. . . I think both of us believe that the integrity of the
process is best preserved by not having those discussions at
our level.'' 114 Although Ruff was generally aware
that the Justice Department was preparing a response to
Chairman Hyde, he did not focus on the fact that this response
was expected from the Department the next day.115
Instead, his primary focus was on the Attorney General's
upcoming decision concerning the Department's preliminary
inquiry into allegations concerning the Vice President's fund-
raising phone calls.116 Ruff, however, did not see
the newly-discovered videotapes as being relevant to the
Department's inquiry into the phone calls.117
Nevertheless, Ruff testified to his ``personal regret that I
did not take steps to communicate this information to the
Department on that day.'' 118
As noted previously, Imbroscio personally spoke with
Bucklin late in the day on Thursday, October 2, to inform him
about the discovery of responsive videotapes. Later that same
day, Imbroscio called Breuer on his car phone as he was
returning with his family from celebrating Rosh Hashanah,
briefed him on his conversation with Bucklin, and relayed the
Majority's desire to have a meeting the following day to
explain the belated production. The next morning, Friday,
October 3, the White House Counsel ``investigations'' team,
including Ruff, Breuer and Imbroscio, had a meeting to discuss
how to gather, identify and produce all responsive videotapes
and audiotapes as quickly as possible.119 During
that meeting, Breuer advised Ruff that he would be contacting
his counterpart at the Department of Justice to advise them of
the discovery of responsive videotapes.120 Breuer
met with Bucklin and Chief Minority Counsel Baron at 2:30 that
afternoon to discuss the discovery of the videotapes and the
steps being taken to ensure prompt production.121
While these events were occurring, Breuer traded voice-mail
messages with his counterpart at the Department of Justice, but
was not able to speak with him until Saturday
morning.122 Attorney General Reno publicly voiced
her displeasure about the delayed notification, but concluded
that the tapes did not change her assessment that the coffees
were lawful.123
DEPUTY WHITE HOUSE COUNSEL AND THE VIDEOTAPES
The Majority seemed intent on establishing that White House
Deputy Counsel Mills had actual knowledge that partial
videotapes of the White House coffees existed. This was based
solely on her involvement in drafting memos in 1996 concerning
limits on the scope of audio or video services that WHCA could
provide to the President in the context of political events
occurring outside of the White House complex. While the
circumstances surrounding the belated production of the
videotapes certainly merited investigation, the Majority's oft-
stated suspicions in this regard were not vindicated by the
evidence. Mills testified during her deposition that she was
generally unaware what WHCA was videotaping.124 She
was not involved with the coffees during the time they were
occurring, did not attend any coffees, and did not even know
there was a coffee ``program.'' 125
Mills' prior involvement with WHCA focused on advising them
about the limits on their support activities during campaign-
related travel, in order to ensure that the government was not
paying for campaign activity in violation of the Hatch
Act.126 These discussions, however, focused on
communication support being provided by WHCA during
Presidential campaign trips, not on videotaping activities
during small, closed-press events in the White
House.127 WHCA Director of Operations Smith, the
main contact for Mills on these issues, confirmed during his
testimony to the Committee that ``I never discussed video,
audiotaping with Ms. Mills at any time.'' 128 This
is unsurprising since, at the time Mills had these discussions
with Smith, the activities of the Audio-Visual Unit were not
one of Smith's responsibilities.129 Mills also had
meetings with WHCA Commander Joseph Simmons concerning Hatch
Act issues, who also testified that ``videotaping was just not
a subject that was brought up'' in these
meetings.130 Even if the topic had come up, Col.
Simmons did not have detailed knowledge of the scope of WHCA's
videotaping activities. Indeed, it was his personal
understanding at the time of his meetings with Mills that
closed-press events such as ``coffees,'' would not be
videotaped by WHCA.131 Accordingly, there is no
basis to conclude that Mills had any specific knowledge of the
extent to which closed-press meetings occurring within the
White House, such as the coffees, would be videotaped by WHCA.
ALLEGATIONS CONCERNING ALTERATION OF THE VIDEOTAPES
Approximately two weeks after the belated production of the
tapes, Rep. Dan Burton (R-Ind.) appeared on CBS's ``Face the
Nation'' and alleged that the tapes had been altered in some
way. ``We think some of these tapes may have been cut off
intentionally, you know, altered in some way'' because some
``cut off very abruptly.'' 132 The Majority of this
Committee hired a technical expert, Paul Ginsburg, to examine
the originals of the videotapes produced by the White House for
evidence of alteration or editing prior to the videotapes
having been produced. Ginsburg concluded that there was no
evidence of any alterations whatsoever, but had been instructed
by the Majority not to divulge his conclusions. As weeks went
by without disclosure, Senator Glenn wrote several letters to
Chairman Thompson pointing out the unfariness of not clearing
these career military personnel of any suspicion. Eventually,
Chairman Thompson stated publicly that there had been no
tampering.133
Suspicions about ``alterations'' were also initially
aroused by the apparent lack of audio for a coffee attended by
John Huang on June 18, 1996.134 The Committee found
that the apparent absence of sound on the tape of the coffee
attended by Huang was a result of a technical mistake in the
dubbing process. According to Smith's deposition testimony, the
tape provided to the Committee did have sound, but it was
mistakenly recorded onto the second audio channel normally used
to record part of a stereo signal, rather than the first audio
channel on which the mono sound from the videotape camera
microphone is typically recorded, resulting in an apparent
absence of sound when played on the non-stereo video players
available to the Committee.135
OTHER PRODUCTION ISSUES
By the second day of the hearings on this topic, the
Committee had already heard from WHCA personnel concerning the
administrative mistake which had resulted in the failure to
identify responsive videotapes in response to the Committee's
earlier request. Since the recordhad already established that
WHCA was responsible for the belated production, the Majority treated
the appearance of White House Counsels Ruff, Breuer and Imbroscio as an
opportunity to raise several other charges of failure to respond
promptly to the Committee's document requests. Many of these charges
were exceedingly unfair, while some raised issues of concern to the
Committee as a whole about the effectiveness of White House document
search and production procedures. In no instance, however, did the
evidence support a conclusion that the White House deliberately
delayed, concealed, or withheld documents from the Committee.
The Presidential ``Diary''
During his opening statement on October 29, Chairman
Thompson charged that, during the investigation into the
belated production of the videotapes, the Majority had
discovered the existence of a presidential ``diarist'' and that
the ``diary'' she was responsible for maintaining had not been
produced in response to the Committee's request for such
materials.136 White House Counsel Ruff, in lieu of
an opening statement, immediately took issue with Chairman
Thompson's ``misleading assessment'' and explained that the
``diarist'' to whom Thompson referred was an employee of the
National Archives whose duties included collecting the
President's ``schedules, briefing papers, phone logs, guest
lists, and other records'' for archival purposes.137
The ``diary'' referred to by the Chairman is actually a
computer database utilized by the diarist to index the
collected presidential materials.138 It strains
common-sense for the Majority to argue that this computerized
index maintained by a professional archivist is a ``diary''
within the meaning of the Committee's definition of
``document.'' Moreover, using this index, over a thousand pages
of responsive documents being held by the diarist had already
been identified and produced.139 White House
document productions on March 20, May 20, June 13 and August
18th each clearly listed ``the diarist'' as the source of some
of the documents produced.140 Since the information
in the index is drawn from the underlying documents themselves,
production of the corresponding sections of the index would
have provided the Committee with no additional
information.141
By the end of the day, Chairman Thompson conceded that
White House counsel had not failed to respond to the
Committee's requests in this regard, but suggested that
Committee counsel conduct a review of the diarist's index ``to
let us see whether or not there may be some dates there that
would jump out at us that we know are relevant that you may not
know is relevant.'' 142 Although the Majority
continually emphasized the potential relevance of the diarist's
work materials, no member of the Majority staff even called the
White House to arrange to review these materials until late in
December.143 The Majority staff never followed up on
this initial contact and the review was never conducted,
although the offer to review the records was renewed as late as
January 9 in a letter from Breuer.144 Given that the
Majority made no attempt to review these documents, it is
difficult to credit their complaints that the belated
``discovery'' of the diarist impeded the Committee's
investigation in any way.
WAVE records relating to Mr. Wu
The Committee's August 1 subpoena to the White House was
precipitated by the White House's failure to produce White
House entry records (known as ``WAVE records'') relating to an
associate of Charlie Trie named Ng Lap Seng (also known as
``Mr. Wu'') until after the Committee had heard testimony
concerning his contacts with Trie.145 During the
October 29 hearing, some members of the Committee suggested
that the White House deliberately withheld the documents in
question until after the public hearings concerning Trie had
concluded.
Although the timing of the production of Wu's WAVE records
was regrettable, the circumstances do not support the inference
that the White House attempted to conceal the existence of the
records from the Committee until after public hearings on this
topic had concluded. First, in response to the Majority's
request to expedite the production of specific categories of
documents, the White House Counsel's office had put the
Committee on written notice that they had not yet received the
White House responses to their request for Wu's WAVE
records.146 In his testimony before the Committee,
White House Counsel Breuer was very specific in his
recollection that he had provided the Committee with detailed
information about the White House's progress in responding to
the Committee's requests for expedited production contained in
its letter of May 21.
[A]s you know, I discussed this with [Majority
Counsels] Mr. Bucklin and with Mr. Tipps. In fact, Mr.
Tipps brought me out of a deposition because he knew
that it was our position that we couldn't get you the
May 21 information right away. It was my decision prior
to--after the May 21 request, to meet with your staff
so we could go over what you had and didn't have. It
was at that time, Mr. Madigan, with all due respect,
that the Committee knew what you had and what you
didn't have. We worked out a schedule with you to
complete those requests.147
Second, the Majority did not advise the White House of the
upcoming hearings concerning Wu, which would have put them on
notice that the Wu production was a priority.148
Charles Ruff testified in his deposition that the Wu records
were retrieved by a member of the White House press office in
response to a press inquiry. When the Counsel's office learned
that documents relevant to the Committee's ongoing hearings had
been located, these WAVE records were produced to the Committee
first before being given to the press.149 During his
deposition, Michael Imbroscio, one of the staff attorneys in
the White House Counsel's Office, described a meeting wherein
Breuer explained to Bucklin the circumstances surrounding the
production of Wu's WAVE records and said that Bucklin
``expressed, in essence, some sadness that he had not been
communicated [the] explanation before, and that so much had
been made of it.'' 150 Breuer also remembered
Bucklin saying ``something to the effect that if I had had the
opportunity to explain to everyone exactly why we produced the
Ng Lap Seng [Wu] document when we did, it may well have been
that a lot of the uproar would have been unnecessary.''
151
Lisa Berg documents
Another issue concerning the timing of document productions
arose on July 29 when the Committee received documents relevant
to the deposition of Lisa Berg, a former Director of Advance
for Vice President Gore, three hours after her deposition had
concluded.152 This deposition, however, was
scheduled on very short notice with the Committee issuing a
notice of deposition dated Friday, July 25, seeking Berg's
appearance on Tuesday, July 29.153 As Breuer
testified before the Committee, such short lead times presented
substantial challenges to the White House in producing all
relevant documents in a complete and timely manner:
I realize to some of the members sitting here, when
you get something in the last minute, it appears like
there is a pattern of obstruction or delay. I suggest
to you that a fair reading is that often when you get
documents in the last minute, it is a direct response
to this Committee saying we are talking the deposition
of Mr. Smith in three days, please drop everything and
do whatever you can to get those documents to us as
quickly as possible, and we have done
that.154
Despite these circumstances, Majority Counsel Madigan suggested
in public hearings that this lapse was a deliberate attempt by
the White House to frustrate the Committee's work. This
suggestion is untenable, however, in light of the White House's
subsequent offer to make her available for additional
questioning about the specific documents in
question.155
Mr. Madigan, time and again when in the public eye
there have been complaints about getting documents
later, we have said to you, if you truly feel
disadvantaged by not getting a document, you can
redepose or interview or have witnesses. Lisa Berg is
an example where publicly you complained that you
didn't have the Lisa Berg document. . . . we have
promptly and in private, not to make it a public
spectacle, said, Would you like the opportunity to
speak to her about the documents . . . that you have
received? And you have not taken us up on that offer.
As was the case with so many other allegations of supposed
White House obstruction, the Majority declined the White House
invitation to re-depose or re-interview Berg,156
thereby casting substantial doubt on the Majority's assertion
that the belated production of the Berg documents seriously
compromised the Committee's investigation.
CONCLUSION
The Committee's hearings have produced numerous revelations
about the Administration's fund-raising practices that have
invited substantial criticism. The Minority has addressed the
specifics of these issues in other parts of this report. It
bears noting, however, that most of these stories were based in
large part on documentary and testimonial evidence provided by
the White House. Against this backdrop, accusations that the
White House intermittently departed from its policy of
cooperativeness in order to conceal material of questionable
significance to the Committee's investigation are wholly
unpersuasive.
During the questioning of White House counsels Ruff, Breuer
and Imbroscio, the Majority frequently challenged the
reasonableness of the procedures utilized by their office to
identify and produce documents responsive to the Committee's
numerous requests. The record is clear, however, that the White
House search procedures were reasonable under the
circumstances. The fact that these procedures sometimes failed
to immediately identify and produce all relevant documents did
not come close to supporting the inference that the White House
acted with the intent to obstruct the Committee's
investigation.
Footnotes
\1\ Exhibit 1488: Letter to Lanny Breuer from Majority Counsel,
regarding ``a request for production of documents,'' 4/9/97.
\2\ Exhibit 1489: Letter to Lanny Breuer from Majority Counsel
regarding ``Second Request for Documents,'' 5/21/97.
\3\ Two letters to Lanny Breuer from Majority Counsel regarding
supplemental requests for documents, 6/9/97 and 6/11/97.
\4\ Letter to Majority Chief Counsel from Charles Ruff, Counsel to
the President, 7/25/97.
\5\ Letter to Chief Counsel from Charles Ruff, Counsel to the
President, regarding a summary of the status of the White House's
production and ``the understandings'' reached between the White House
and Committee staff concerning outstanding production of documents, 7/
25/97.
\6\ Exhibit 1490: Subpoena to the Custodian of Documents, The White
House, issued by the Committee on Governmental Affairs for ``all
documents and other things identified or described in Schedule A,'' 7/
31/97.
\7\ Exhibit 1509: Letter to Lanny Breuer from Majority Counsel
regarding ``Supplemental Request for Documents,'' 8/19/97.
\8\ Exhibit 2435M: Memorandum from Jack Quinn, Counsel to the
President, to White House Staff re: Appropriate Use of Resources, 4/8/
96.
\9\ Exhibit 2433M: Memorandum from Antonio Lopez, Director, White
House Military Office, to White House Staff re: White House Video
Documentation Office, 5/8/89.
\10\ Exhibit 2433M: Memorandum from Antonio Lopez, Director, White
House Military Office, to White House Staff re: White House Video
Documentation Office, 5/8/89.
\11\ Exhibit 2433M: Memorandum from Antonio Lopez, Director, White
House Military Office, to White House Staff re: White House Video
Documentation Office, 5/8/89.
\12\ Exhibit 2433M: Memorandum from Antonio Lopez, Director, White
House Military Office, to White House Staff re: White House Video
Documentation Office, 5/8/89.
\13\ Exhibit 2433M: Memorandum from Antonio Lopez, Director, White
House Military Office, to White House Staff re: White House Video
Documentation Office, 5/8/89.
\14\ Steven Smith deposition, 10/10/97, pp. 85/86.
\15\ Stephen Goodin deposition, 10/21/97, p. 11.
\16\ Stephen Goodin deposition, 10/21/97, pp. 15/16.
\17\ Stephen Goodin deposition, 10/21/97, pp. 16 & 55/56.
\18\ Stephen Goodin deposition, 10/21/97, pp. 17/18.
\19\ Stephen Goodin deposition, 10/21/97, pp. 24/25.
\20\ Steve Smith deposition, 10/10/97, p. 53.
\21\ Stephen Goodin deposition, 10/21/97, pp. 23 & 77.
\22\ Stephen Goodin deposition, 10/21/97, pp. 24-25.
\23\ Stephen Goodin deposition, 10/21/97, p. 28.
\24\ Chief Charles McGrath deposition, 10/20/97, p. 216.
\25\ Chief Charles McGrath deposition, 10/20/97, p. 206.
\26\ Chief Charles McGrath deposition, 10/20/97, p. 207; Stephen
Goodin deposition, 10/21/97, p. 28.
\27\ Stephen Goodin deposition, 10/21/97, pp. 32 & 35.
\28\ Chief Charles McGrath deposition, 10/20/97, p. 175.
\29\ Stephen Goodin deposition, 10/21/97, p. 35.
\30\ Chief Charles McGrath deposition, 10/20/97.
\31\ Steve Smith deposition, 10/10/97, pp. 185-186.
\32\ Stephen Goodin deposition, 10/21/97, pp. 40.
\33\ Chief Charles McGrath deposition, 10/20/97, pp. 26-27.
\34\ Chief Charles McGrath deposition, 10/20/97, pp. 52-53.
\35\ Steven Smith deposition, 10/10/97.
\36\ Stephen Goodin deposition, 10/21/97, p. 77.
\37\ Stephen Goodin deposition, 10/21/97, p. 78.
\38\ Chairman Thompson, 10/29/97 Hrg., p. 91.
\39\ Lanny Breuer, 10/29/97 Hrg., p. 106.
\40\ Exhibit 1488: Letter to Lanny Breuer from Majority Counsel
regarding ``a request for production of documents,'' 4/9/97.
\41\ Exhibit 2423M: Memorandum from Charles F.C. Ruff, Counsel to
the President, to Executive Office of the President re: Document
Request, 4/28/97.
\42\ Exhibit 2423M: Memorandum from Charles F.C. Ruff, Counsel to
the President, to Executive Office of the President re: Document
Request, 4/28/97.
\43\ Exhibit 2423M: Memorandum from Charles F.C. Ruff, Counsel to
the President, to Executive Office of the President re: Document
Request, 4/28/97.
\44\ Alan P. Sullivan deposition, 10/16/97, pp. 5-8.
\45\ Alan P. Sullivan deposition, 10/16/97, p. 10.
\46\ Alan P. Sullivan Deposition, 10/16/97, p. 62.
\47\ Col. Charles Kenneth Campbell deposition, 10/21/97, p. 109.
\48\ Col. Charles Kenneth Campbell deposition, 10/21/97, p. 57.
\49\ Col. Charles Kenneth Campbell deposition, 10/21/97, p. 11.
\50\ Col. Charles Kenneth Campbell deposition, 10/21/97, p. 78.
\51\ Col. Charles Campbell, 10/23/97 Hrg., p. 69.
\52\ Col. Charles Campbell, 10/23/97 Hrg., p. 69.
\53\ Col. Charles Kenneth Campbell deposition, 10/21/97, pp. 107-
108.
\54\ Exhibit 2423M: Memorandum from Charles F.C. Ruff, Counsel to
the President, to Executive Office of the President re: Document
Request, 4/28/97.
\55\ Exhibit 2428M: E-mail message from Col. Charles Kenneth
Campbell to WHCA personnel re: HOT SUSPENSE--Document Search, 4/29/97.
\56\ Col. Charles Kenneth Campbell deposition, 10/21/97, p. 105.
\57\ Exhibit 1488: Letter from Majority Counsel to White House
Counsel Lanny Breuer, 4/9/97.
\58\ Lanny Breuer, 10/29/97 Hrg., p. 177.
\59\ Lanny Breuer deposition, 10/17/97, p. 41.
\60\ Lanny Breuer deposition, 10/17/97, p. 42.
\61\ Col. Charles Kenneth Campbell deposition, 10/21/97, p. 83.
\62\ Col. Charles Kenneth Campbell deposition, 10/21/97, p. 84.
\63\ Deposition of Chief Charles McGrath, 10/20/97, pp. 89-90.
\64\ Majority Counsel, 10/29/97 Hrg., p. 138.
\65\ Steven Smith, 10/23/97 Hrg., p. 93.
\66\ Lanny Breuer, 10/29/97 Hrg., p. 108.
\67\ Lanny Breuer, 10/29/97 Hrg., p. 109.
\68\ Lanny Breuer, 10/29/97 Hrg., p. 109.
\69\ Lanny Breuer, 10/29/97 Hrg., pp. 110-111.
\70\ Michael Madigan, 10/29/97 Hrg., p. 139.
\71\ Lanny Breuer, 10/29/97 Hrg., p. 145.
\72\ Lanny Breuer, 10/29/97 Hrg., p. 180.
\73\ Michael Imbroscio deposition, 10/17/97, pp. 60-61.
\74\ Michael Imbroscio deposition, 10/17/97, p. 61.
\75\ Michael Imbroscio deposition, 10/17/97, pp. 63 & 67.
\76\ Michael Imbroscio deposition, 10/17/97, pp. 64-66.
\77\ Michael Imbroscio deposition, 10/17/97, p. 73.
\78\ Lanny Breuer deposition, 10/17/97, p. 54.
\79\ Lanny Breuer deposition, 10/17/97, p. 56.
\80\ Michael Imbroscio deposition, 10/17/97, pp. 74-75.
\81\ Michael Imbroscio, 10/29/97 Hrg., p. 118; Michael Imbroscio
deposition, 10/17/97, pp. 79-81.
\82\ Exhibit 1509: 8/19/97 letter from Majority Counsel to White
House Counsel Lanny Breuer.
\83\ Michael Imbroscio deposition, 10/17/97, p. 81.
\84\ Michael Imbroscio deposition, 10/17/97, p. 79.
\85\ Michael Imbroscio deposition, 10/17/97, p. 83.
\86\ Michael Imbroscio, 10/29/97 Hrg., p. 118.
\87\ Michael Imbroscio deposition, 10/17/97, p. 78.
\88\ Michael Imbroscio, 10/29/97 Hrg., p. 117; Michael Imbroscio
deposition, 10/17/97, p. 121.
\89\ Michael Imbroscio, 10/29/97 Hrg., p. 117; Michael Imbroscio
deposition, 10/17/97, p. 122.
\90\ Michael Imbroscio deposition, 10/17/97, pp. 76-77 & 85-86.
\91\ Michael Imbroscio deposition, 10/17/97, p. 85.
\92\ Michael Imbroscio deposition, 10/17/97, p. 88.
\93\ Michael Imbroscio deposition, 10/17/97, p. 91.
\94\ Steven Smith deposition, 10/10/97, p. 138.
\95\ Steven Smith deposition, 10/10/97, pp. 139-140.
\96\ Michael Imbroscio deposition, 10/17/97, pp. 103 & 105-106.
\97\ Michael Imbroscio deposition, 10/17/97, pp. 111-112.
\98\ Michael Imbroscio, 10/29/97 Hrg., pp. 163 & 190.
\99\ Michael Imbroscio deposition, 10/17/97, pp. 139-140.
\100\ Michael Imbroscio deposition, 10/17/97, p. 137; Steven Smith
deposition, 10/10/97, p. 151.
\101\ Michael Imbroscio deposition, 10/17/97, p. 140.
\102\ Michael Imbroscio deposition, 10/17/97, pp. 146-148.
\103\ Michael Imbroscio deposition, 10/17/97, p. 150.
\104\ Michael Imbroscio deposition, 10/17/97, pp. 151-152.
\105\ Michael Imbroscio deposition, 10/17/97, pp. 151-152.
\106\ Michael Imbroscio deposition, 10/17/97, pp. 151-152.
\107\ Michael Imbroscio deposition, 10/17/97, p. 153.
\108\ Michael Imbroscio deposition, 10/17/97, p. 158.
\109\ Michael Imbroscio deposition, 10/17/97, p. 156.
\110\ Michael Imbroscio deposition, 10/17/97, pp. 163-164.
\111\ Lanny Breuer deposition, 10/17/97, p. 99.
\112\ Lanny Breuer deposition, 10/17/97, p. 99.
\113\ Charles F.C. Ruff, 10/29/97 Hrg., p. 223; Charles F.C. Ruff
deposition, 10/27/97, p. 34.
\114\ Charles F.C. Ruff, 10/29/97 Hrg., pp. 223 & 225.
\115\ Charles F.C. Ruff deposition, 10/27/97, p. 38.
\116\ Charles F.C. Ruff, 10/29/97 Hrg., p. 224.
\117\ Charles F.C. Ruff's deposition, 10/27/97, p. 37.
\118\ Charles F.C. Ruff, 10/29/97 Hrg., p. 224.
\119\ Charles F.C. Ruff's deposition, 10/27/97, p. 56; Lanny
Breuer's deposition, 10/17/97, p. 74.
\120\ Charles F.C. Ruff's deposition, 10/27/97, p. 56.
\121\ Lanny Breuer's deposition, 10/17/97, pp. 99-100.
\122\ Charles F.C. Ruff's deposition, 10/27/97, p. 38.
\123\ 1Washington Post , 10/10/97.
\124\ Cheryl Mills deposition, 10/18/97, pp. 57-59.
\125\ Cheryl Mills deposition, 10/18/97, pp. 54-57.
\126\ Cheryl Mills deposition, 10/18/97, p. 58.
\127\ Cheryl Mills deposition, 10/18/97, pp. 65-73.
\128\ Steve Smith, 10/23/97 Hrg, p. 90.
\129\ Steve Smith, 10/23/97 Hrg., p. 90.
\130\ Col. Joseph Simmons IV's deposition, 10/16/97, p. 45.
\131\ Col. Joseph Simmons IV deposition, 10/16/97, p. 125.
\132\ Washington Post, 10/20/97.
\133\ 12/5/97 letter from Ranking Minority Member Senator John
Glenn (D-Ohio) to Chairman Thompson (R-Tenn.) (urging that Ginsburg's
findings be made public and referencing earlier letter dated 11/19/97
to the same effect).
\134\ New York Times, 10/7/97.
\135\ Steven Smith's deposition, 10/10/97, pp. 157-158.
\136\ Chairman Thompson, 10/29/97 Hrg., pp. 93-94.
\137\ Charles Ruff, 10/29/97 Hrg., p. 99.
\138\ Charles Ruff, 10/29/97 Hrg., p. 100.
\139\ Charles Ruff, 10/29/97 Hrg., p. 101.
\140\ Michael X. Imbroscio, 10/29/97 Hrg., pp. 114-115.
\141\ Charles Ruff, 10/29/97 Hrg., p. 199.
\142\ Chairman Thompson, Hrg., p. 219.
\143\ Letter from Lanny Breuer, Special Counsel to the President,
to Majority Counsel, 1//9/98.
\144\ Letter from Lanny Breuer, Special Counsel to the President,
to Majority Counsel, 1//9/98.
\145\ The Washington Post, 7/31/97.
\146\ Lanny Breuer, 10/29/97 Hrg., p. 151.
\147\ Lanny Breuer, 10/29/97 Hrg., p. 151.
\148\ The Washington Post, 7/31/97.
\149\ Charles Ruff deposition, 10/27/97, p. 31.
\150\ Michael Imbroscio deposition, 10/17/97, p. 62.
\151\ Lanny Breuer, 10/29/97 Hrg., pp. 183-184.
\152\ Majority Counsel, 10/29/97 Hrg., p. 150.
\153\ Lisa Berg deposition, 7/29/97, Exhibit 1: Notice of Senate
Deposition.
\154\ Lanny Breuer, 10/29/97 Hrg., p. 109.
\155\ Lanny Breuer, 10/29/97 Hrg., pp. 160-161.
\156\ Lanny Breuer, 10/29/97 Hrg., pp. 160-161.
PART 8 MINORITY RECOMMENDATIONS
issues that warrant further investigation
The U.S. Department of Justice, Internal Revenue Service
and Federal Election Commission are already engaged in civil
and criminal enforcement actions related to the 1996 and prior
federal elections. Examples include the Justice Department's
recent criminal convictions of the Kims and Lums and recent
indictments of Charlie Trie and Maria Hsia; the IRS's rejection
of the National Policy Forum's application for tax-exempt
status; and the FEC's 1996 civil suit against the Christian
Coalition for coordinating election-related activities with
candidates. Many of the persons and organizations discussed in
this Report are already under investigation by one or more of
these federal agencies. The Minority hereby refers this Report
to all three agencies to provide them with the Minority's
analysis and to allow evaluation and commencement of
investigations of violations of the applicable laws where
warranted.
Based upon the evidence before the Committee, and the
evidence contained in the Minority report, the Minority also
recommends additional investigation by the Department of
Justice of individuals and entities that appear to have engaged
in the obstruction of this investigation, or willfully provided
testimony that they did not believe to be true to the
Committee.
recommendations
By Constitutional design, investigations undertaken by the
U.S. Senate are not law enforcement efforts, but inquiries made
``in aid of the legislative function.'' The investigation
undertaken by the Senate Committee on Governmental Affairs has
exposed numerous flaws in existing law rendering the federal
campaign finance system vulnerable to circumvention and
exploitation. If the vulnerabilities so starkly revealed are
not a catalyst for reform of the campaign finance system, then
the Committee's investigative efforts will have failed in a
principal purpose. Accordingly, the following section offers
legislative recommendations to repair and strengthen the
campaign finance system. Many of these proposals are included
in S. 25, the McCain-Feingold campaign finance reform bill. The
consideration by the Senate of that legislation, as well as
other proposed campaign finance reforms, will be a measure of
the lessons learned from the 1996 elections.
Legislative recommendations on campaign finance reform
Eliminate Soft Money: Eliminating unrestricted
contributions to political parties from individuals,
corporations and unions is the most important step towards
reducing the influence of money in the campaign finance system.
The McCain-Feingold proposal would ban soft money contributions
to political parties. If the flow of soft money is not halted,
the campaign finance abuses and loss of public confidence that
tainted the 1996 elections are likely to worsen by the year
2000.
Address Issue Advocacy: A soft money ban, however
fundamental to reform, must be coupled with reforms addressing
candidate advertisements masquerading as issue ads. The McCain-
Feingold proposal contains provisions which will bring
advertisements that function as candidate ads, but use
technicalities to avoid disclosure and contribution limits,
within the same laws that govern other candidate ads. One of
these provisions would require any communication that mentions
a federal candidate within 60 days of a general election to
comply with disclosure requirements and restrictions on the use
of union and corporate funds. This provision would not prevent
or ban any advertisement; it would provide limits on how
certain ads may be financed.
Strengthen and clarify the statutory prohibitions
against foreign contributions and contributions in the name of
another. Currently, neither prohibition clearly applies to soft
money donations, and the foreign money prohibition does not
explicitly prohibit foreign nationals from participating in a
campaign through direct expenditures.
Give the Federal Election Commission the resources
it needs to do its job. Any reform, from the most modest
improvements in disclosure to the most comprehensive revision
of campaign financing, will not be complete if the agency
charged with enforcing the law lacks the resources to do so.
Give the Federal Election Commission the authority
needed to enforce the law. The Commission's enforcement
authority should be strengthened and Commission procedures
streamlined. Needed changes include:
Increase the size of the Commission to an odd
number of Commissioners to avoid voting deadlock;
Grant the Commission the power to seek
injunctions in federal court;
Streamline the process for initiating
investigations by eliminating requirements for a formal
Commission vote and formal finding that a violation
occurred; and
Permit the Commission to assess automatic
fines for late disclosure reports.
Improve public disclosure. Disclosure is
fundamental to informing voters and deterring corruption in the
political process. Advances in technology make electronic
disclosure of campaign reports a viable option that would make
information about candidates'' funding available to the widest
possible audience in a timely manner.
Mandate electronic filing for all candidates
and political committees to speed the disclosure
process and allow more disclosure to voters. Such a
provision is contained in the McCain Feingold proposal
and includes a waiver for candidates raising less than
a certain threshold amount;
Require that disclosure reports of Senate
candidates be filed directly with the FEC rather than
with the Secretary of the Senate;
Require that all reports be electronically
filed by the due date of the report;
Require committees raising in excess of
$100,000 per calendar year to file a monthly report;
Develop a constitutionally acceptable means to
improve public disclosure of election-related issue
advertising; and
Require all issue advertising which identifies
a specific federal candidate in an election year to
include a disclaimer identifying the ad sponsor, and
require the ad sponsor to provide additional
information identifying any individual or organization
providing significant funding for the communication.
For all contributions over $1,000, require
certification, under penalty of perjury, that a contribution
meets the requirements of federal law, including that the
contributor is a citizen or legal permanent resident and that
the contribution was made from the funds of the contributor.
Reduce the costs of campaigns. During the 1996
campaign, federal candidates spent $400 million on television
advertising. Congress should consider mandating some free time
from broadcasters as one way to decrease the amount candidates
buy and parties are required to spend to get out their message.
Clarify and strengthen applicable tax law. Tax
exempt organizations have become increasingly influential in
federal elections, while operating under legal requirements
that provide insufficient guidance on permissible campaign
activity and disclosure obligations.
Clarify campaign restrictions applicable to
organizations operating under section 501(c)(4) of the
tax code. The current restrictions appear primarily in
IRS regulations and require clarification regarding
what social welfare organizations are legally permitted
to do;
Ensure public disclosure of all organizations
whose primary purpose is to influence elections by
requiring that all organizations claiming an exemption
from taxes under Section 527 also file with the FEC or
the applicable state body. This limitation would ensure
that issue advocacy organizations claiming a section
527 exemption from taxation for the purpose of
influencing federal elections do not circumvent the
public disclosure requirements now applicable to other
organizations established to influence federal
elections; and
Consider requiring the IRS to approve or
disapprove all applications for tax exempt status within one
year, and requiring that an application for exempt status be
approved before an organization may hold itself out as tax-
exempt.
Recommended procedures for future Senate investigations
Special investigations by the Senate into
potentially serious misconduct by high level executive branch
officials should be given a bipartisan structure similar to
that of the Watergate and Iran-Contra committees. The Committee
undertaking such an investigation should consider the elevation
of the Ranking Member to Vice Chair, and the hiring of a single
chief of staff assisted by a nonpartisan staff to carry out the
investigation.
The Senate should establish uniform protocols and
procedures to govern special investigations. Such process rules
should mandate offering both Minority and Majority staff the
opportunity to be present at all investigative interviews and
depositions, establish notice requirements for the taking of
depositions and calling witnesses at hearings, and establish
procedures for the issuance of subpoenas. At a minimum, notice
requirements should guarantee all witnesses and Committee
Members at least 72 hours notice of persons being called to
testify at a Committee hearing. Procedures concerning the use
of classified information at public hearings should also be
provided.
Procedures should be established for the
consideration of requests for immunity. Before a Committee vote
is held on a grant of immunity, Committee Members should be
fully informed of any proffer of testimony by the person
requesting immunity and of the position of the Justice
Department regarding the immunity request.
Other recommendations
Democratic and Republican Parties: Both parties
should improve their procedures for ensuring the legality and
propriety of the contributions they accept.
Republican Party: To the extent the following
foreign funds have not already been refunded, the Republican
Party and its affiliate, the National Policy Forum, should
immediately refund $800,000 resulting from a 1996 loan default
involving a foreign national and foreign dollars from Hong
Kong; $215,000 from a 1992 contribution by Michael Kojima
utilizing foreign funds from Japan; $50,000 from a 1996
contribution by Panda Industries, Inc., a company owned by a
foreign national; and $25,000 from a 1996 contribution by the
Pacific Cultural Foundation, a foreign organization based in
Taiwan.
Department of Commerce: While the Department of
Commerce has made changes to its procedures granting security
clearances, the operation of the Commerce Department Security
Office should be restructured to enhance communication between
the divisions and establish better procedures for tracking
employee clearances.
Federal Bureau of Investigation: The FBI should
review its current provisions regarding security clearance
procedures granted to legislative and executive branch
employees and appointees and report its findings to the
Committee.
Central Intelligence Agency:
The CIA should consider establishing enhanced
procedures and guidelines to maintain records of
classified documents shown to executive branch
officials. This investigation did not provide any
evidence that the CIA improperly disseminated
classified information to John Huang. However, the
investigation did demonstrate that the CIA does not
maintain complete records of all materials shown to
individuals in the executive branch. Enhanced records
would serve to protect the CIA from allegations of
impropriety as well as function as an aid in
investigating the merits of future allegations.
The CIA should consider establishing enhanced
procedures and guidelines for the provision of
information to other executive branch agencies. During
this investigation, there was controversy over the
National Security Council's request for, and the CIA's
distribution of, information regarding Roger Tamraz.
The Minority could not determine why reports from two
CIA divisions were not consistent or complete or why
one CIA division contacted the NSC for the purpose of
providing information over the telephone that appeared
to be inaccurate and unwanted. It is important for
executive branch agencies to make use of information
obtained by the CIA, but the general restrictions and
determinations regarding that information should be
known to both the CIA and the requesting agencies.
PART 9 RESPONSE TO MAJORITY REPORT
introduction
The Senate Resolution establishing the Special
Investigation into the 1996 elections stated that the Committee
on Governmental Affairs was to examine allegations of
impropriety and illegality by both political parties. Despite
the language of the Resolution, the investigation was conducted
in a highly partisan fashion: The hearings focused almost
entirely on allegations relating to Democrats, while largely
ignoring allegations relating to Republicans. It is thus not
surprising that the Majority Report on the investigation is a
highly partisan document. The partisan bias is manifested in
many ways, including questionable interpretations of the
evidence, the use of double standards when discussing similar
conduct by Democrats and Republicans, and even outright
misstatements of the facts and the law.
This part of the Minority Report provides an introduction
to the Minority's critique of the Majority's Report. In
pointing out the rather egregious errors, omissions,
misstatements, and unsupported allegations in the Majority
Report, we do not mean to suggest that we are defending the
system used by both the Democratic and Republican parties to
raise campaign funds in 1996. It is one thing to defend against
a false allegation that a fundraising practice is illegal. It
is another to say that the practice should continue to be
legal. That distinction is clear in the Minority Report.
Much of the evidence presented to the Committee was open to
widely varying interpretations. When the evidence is unclear,
it is unfair for the Committee to pretend otherwise by hurling
accusations either directly or by innuendo that may result in
unfairly damaging the reputations of innocent people. This
Committee had an unfortunate history in the early 1950's in
this regard, and it would be shameful to repeat it.
Unfortunately, the Majority has repeatedly chosen to
interpret facts in such a way that Democrats are portrayed in
the most unfavorable light while Republicans are given the
benefit of the doubt. A case in point is the contrast between
the Majority's treatment of Harold Ickes, former Deputy Chief
of Staff in the Clinton White House, and its treatment of Haley
Barbour, the former chairman of the Republican National
Committee. The Majority refuses to accept Ickes's denial of
accusations made against him by Warren Meddoff despite the lack
of any supporting evidence for these accusations and despite
numerous facts which undermine Meddoff's credibility. By
contrast, the Majority accepts Barbour's testimony about the
National Policy Forum's loan transaction even though it
conflicts with testimony from several credible sources and a
great deal of documentary evidence.
This double standard in the treatment of witnesses is also
evident in the Majority's chapter on the White House coffees.
That chapter contains a lengthy discussion of the allegation by
Karl Jackson that a solicitation was made at a coffee he
attended. Jackson had been a White House aide during the Bush
Administration and later went into business with former Vice
President Dan Quayle (the latter fact is omitted from the
Majority Report). Jackson's GOP ties have utterly no bearing on
his credibility, in the Majority's view, and yet the Democratic
ties of witnesses who contradict him are given overwhelming
importance. Moreover, the Majority includes a completely
baseless insinuation that the Democratic witnesses misled the
Committee, by stating that they ``claim'' not to have recalled
the alleged solicitation.
The Majority Report also applies a double standard to the
two political parties when the parties have engaged in similar
conduct. While Democratic examples are highlighted, comparable
Republican examples are downplayed or simply ignored. Thus, for
example, the Majority criticizes the Democratic National
Committee's coordination with the Clinton White House, ignoring
similar coordination by the Republican National Committee with
the Dole for President campaign and former Republican
Presidential campaigns. Similarly, in the discussion of the use
of access to elected officials as a fundraising tool, the
Majority strongly criticizes the White House coffees organized
by the Democratic National Committee (``DNC'), while ignoring
egregious practices on the Republican side, such as charging
specific prices for access to Republican officials.
Partisan bias is evident throughout the Majority's chapter
on Ted Sioeng, which either minimizes--or simply omits--
Sioeng's Republican connections. For example, the Sioeng
chapter mentions $100,000 in contributions to California State
Treasurer Matt Fong but fails to mention that Fong is a
Republican. The chapter also notes that political contributions
afforded Sioeng access to President Clinton and Vice President
Gore, but fails to mention that Newt Gingrich, the Republican
Speaker of the House, was the guest of honor at a Sioeng-
organized luncheon the day after a Sioeng family company gave
$50,000 to a Republican think tank. Nor does the chapter
mention that the donation was solicited by a top adviser to
Speaker Gingrich and that the think tank was, according to the
Internal Revenue Service, essentially an arm of the Republican
National Committee.
The Majority Report not only contains dubious
interpretations of the facts, it often misstates the facts. The
Majority also misstates the facts by supplying partial
evidence. For example, in the Majority's Charlie Trie chapter,
the Majority states that Xiping Wang testified that the DNC did
not reimburse her for her contribution, implying that the
contribution was not returned by the DNC. Actually, the DNC did
return the contribution--to the United States Treasury, as was
appropriate for a contribution that had been made by a conduit
who was not legally entitled to the money. Similarly, in the
Majority Report's chapter on DNC/White House coordination,
there are citations to the testimony of former DNC Chairman
Donald Fowler to support conclusions regarding the knowledge
and activities of DNC officials Marvin Rosen and Richard
Sullivan without any reference to Rosen's and Sullivan's own
testimony on these subjects.
The misleading character of the Majority's factual
assertions is also illustrated by internal contradictions
within the Majority Report itself. Evidence used to support one
claim is often used to support a contradictory assertion in
another chapter--sometimes even in the same chapter. Similar
inconsistencies are apparent in the Majority's treatment of
witnesses who are deemed credible when they support the
Majority's position but are deemed not credible when they
dispute the Majority's conclusions. Thus, throughout the
Majority'schapter on John Huang at the DNC, the testimony of
Richard Sullivan is cited and relied upon as an honest recitation of
the practices and beliefs of all DNC employees during the 1996 election
cycle. Yet, in the Majority's chapter on the Teamsters, the Majority
discredits Sullivan's testimony. Similar inconsistencies are apparent
in the Majority's treatment of Donald Fowler, whose testimony is
credited and relied upon with respect to his disagreements with Ickes,
but deemed dishonest in the Majority's Tamraz chapter.
The mishandling of evidence is one of the most disturbing
aspects of the Majority Report. Again and again, evidence that
undermines or contradicts the Majority's theories and
allegations is downplayed, mischaracterized, or more often
ignored, while disproved allegations are perpetuated. For
example, a great deal of evidence gathered by the Committee
undermines the theory that John Huang engaged in espionage when
he was employed at the Commerce Department. This exculpatory
evidence is largely absent from the Majority Report. As noted
in Chapter 4 of the Minority Report, Huang failed on many
occasions to exploit his post to obtain classified information.
Moreover, he offered to testify to the Committee under a grant
of immunity that would not have shielded him from prosecution
for espionage-related offenses; his offer was not mentioned in
the Majority Report. In the Minority's view, the most neutral
interpretation of the facts is that Huang was probably not
engaged in espionage. The Majority Report also repeats the
baseless suggestion that the President was involved in a
criminal conspiracy with a consultant to the International
Brotherhood of Teamsters, in spite of the fact that Chairman
Thompson admitted at a hearing that the Committee now had
evidence that disproved such an allegation.
Similarly, the Majority's chapter on Johnny Chung includes
his allegation (made in unsworn statements to journalists) that
a $50,000 contribution he made to the DNC had been solicited by
Margaret Williams, then Chief of Staff to First Lady Hillary
Clinton. The Majority Report fails to mention that Williams
denied this allegation, under oath, when she was deposed by
this Committee, and when she testified before a House
committee. And the Majority ignores a host of other witnesses
whose testimony before that committee supported Williams's
testimony. By publishing the allegation and not the denial, the
Majority creates the false impression that the allegation is
not only unchallenged, but unquestionably true.
Because of the Majority's questionable use of evidence,
sourcing is an extremely important issue. Every assertion that
might be in dispute should be attributed to a source, such as
testimony to the Committee or a document produced in response
to a Committee subpoena. In a number of cases, dubious
assertions in the Majority Report are not footnoted. In some
other cases, the footnotes show that questionable sources were
used, such as staff interviews at which the Minority staff was
not present.
The most important task of the Special Investigation was to
probe allegations of improper or illegal activity, and, thus, a
clear understanding of the campaign finance laws is
fundamental. It is thus surprising to find that the Majority
Report contains many allegations of illegality based on
misstatements of the law. A few examples will suffice:
The Majority's chapter on Clinton White House
coordination with the DNC alleges that this coordination was
illegal and yet fails to cite a single statute, court decision,
or regulation to support its position in this chapter. As
demonstrated in the Minority Report, coordination of an issue
advocacy advertising campaign between a party and its
candidates does not appear to violate provisions of the
existing campaign finance laws.
Allegations in the Sioeng chapter are based on a
misstatement of the law governing foreign contributions.
Contributing ``foreign money'' is not illegal so long as the
donor is legally entitled to give and is not acting as a
conduit for someone else. In Sioeng's case, the issue was not
whether he used funds from foreign bank accounts, but whether
he directed or participated in contribution decisions (which
would have been illegal given his status as a foreign
national). On the basis of its misstatement of the law, the
Majority analyzes the $100,000 in Sioeng-related money
contributed to Matt Fong and concludes that most of these funds
were donated legally, because only $16,000 could be traced to
foreign sources. In fact, Fong's deposition testimony to this
Committee--which is not mentioned in the Majority Report--
strongly indicates that Sioeng was the donor. If Sioeng was the
donor, the entire $100,000 was contributed illegally,
regardless of whether domestic or foreign funds were used.
A major shortcoming of the Majority Report is its failure
to acknowledge the fact that some of the most scandalous
conduct in federal elections is perfectly legal. The campaign
finance laws are so riddled with loopholes that legal
restrictions are largely meaningless. Because of the soft-money
and issue-advocacy loopholes, large corporations and wealthy
individuals are free to spend vast sums of money on behalf of
specific candidates. In both the hearings and in the Majority
Report, the Majority has given short shrift to these systemic
problems.
One of the most disturbing aspects of the Majority Report
is that it suggests, on the basis of inconclusive evidence,
that certain named individuals were spies or foreign agents.
These serious charges are supported solely by weak
circumstantial evidence and speculation--as acknowledged by the
Majority's use of phrases like ``may'' and ``if true.''
Allegations of espionage are grave charges and should not be
made without specific credible evidence. Such serious
allegations can inflict irreparable damage to the reputations
of innocent people, and to do so without having sufficient
evidence is irresponsible.
The remainder of this Response consists of detailed
comments on the Majority Report. It is organized both
thematically and on a chapter-by-chapter basis.
RESPONSE TO ISSUES INVESTIGATED BY THE COMMITTEE
foreign influence
The Majority Report addresses the issues of foreign
influence and foreign money in the 1996 election by focusing
almost exclusively on the alleged role of the Chinese
government. The report includes a declassified chapter
describing efforts by the Chinese government to influence the
U.S. government. The Majority Report also includes a chapter on
Indonesian-born businessman Ted Sioeng, four chapters on John
Huang, and one on Maria Hsia. Taken together, these chapters
are designed to suggest that the so-called China Plan involved
efforts to influence the 1996 presidential election and that by
using Sioeng, Huang, and Hsia as intermediaries, the Chinese
government succeeded in infiltrating the Democratic Party's
fundraising operations.
The Majority's analysis of foreign influence is deeply
flawed. It weaves together conspiracy theories by taking
unrelated facts and occurrences and giving them the most
sinister possible interpretation. The Majority also uses facts
in a highly selective manner. For example, classified
information that contradicts the Majority's theories is simply
disregarded.
Moreover, the Majority fails to acknowledge foreign money
that flowed to Republicans. As discussed in Minority Chapter 3,
the Republican National Committee received hundreds of
thousands of dollars from a Hong Kong businessman who provided
backing for a loan to an RNC affiliate. The Minority also found
strong indications that businessman Michael Kojima, who gave a
half-million dollars to the RNC, acted as a conduit for
Japanese businessmen (see Minority Chapter 6). The Majority
Report makes no mention at all of Representative Jay Kim, a
California Republican, who pleaded guilty to violating the
campaign finance laws because he had accepted illegal foreign
contributions (see Minority Chapter 8).
independent groups
The 1996 campaign saw a surge in activity by organizations
which are not registered with the Federal Election Commission
as political committees. These groups were typically nonprofit
organizations, registered with the Internal Revenue Service as
tax-exempt, social-welfare organizations. These supposedly
``nonpartisan'' groups spent tens of millions of dollars on
behalf of candidates and political parties. Many of them ran
political attack ads--under the guise of ``issue advocacy''--
during the closing weeks of the campaign, and some of the ads
appear to have determined the outcome of close races. Despite
the importance of this phenomenon, the Majority failed to
conduct a serious investigation of these groups.
In its Report, the Majority asserts that it was impossible
to form ``meaningful conclusions'' about nonprofit groups
because of obstruction by several organizations that were
served with Committee subpoenas. While the Majority cited the
AFL-CIO as the prime example of obstruction, several
conservative groups also failed to comply with
Committeesubpoenas, including the Christian Coalition, Americans for
Tax Reform, the National Policy Forum, and two tax-exempt organizations
controlled by Triad Management Services.
The Majority's assertion that it could form no meaningful
conclusions about such groups is questionable on several
grounds. First, such an obstacle did not stop the Majority from
forming conclusions about other investigatory targets who
failed to cooperate, including Democratic fundraisers John
Huang and Charlie Trie. Second, as far as the nonprofit groups
are concerned, the Committee obtained a great deal of
information about conservative groups in spite of those groups'
lack of cooperation--sufficient information to conclude that
several such groups engaged in improper and likely illegal
activity during the 1996 cycle. See Minority Chapter 3 on the
National Policy Forum and Minority Chapters 10 through 13 and
Chapter 15 on other nonprofit groups.
The activity by these and other organizations in the 1996
election cycle sounded only a warning note of what is to come.
As several experts testified in the Committee's hearings on
proposals for campaign finance reform, the use of nonprofit and
other independent organizations to air ``issue advertising''
that is simply disguised advertising on behalf of candidates
will only continue to grow. Given an opportunity for a
watershed examination of the direction that the election system
is heading, the Majority chose not to address any of the
substantial wrongdoing by these groups and actively prevented
the Minority from presenting hearings on the evidence it had
developed.
contribution laundering/third-party transfers
The federal election laws require that contributors donate
their own funds. Thus, it is illegal for a donor to channel
funds through a conduit, for an individual to act as a conduit,
and for a donor to be reimbursed by a third party after having
made a donation. The laws help to ensure that the public knows
who is really paying for elections and also discourage
contributions from individuals who are not legally entitled to
donate, such as foreign nationals who do not have permanent
resident status.
The Majority Report addresses several cases in which there
were allegations that political contributions were made in the
names of third parties during the 1996 election cycle. These
included contributions made in the names of Yogesh Gandhi, Hsi
Lai Temple monastics, and Yue F. Chu and Xiping Wang.
Although these Democratic examples are discussed at length,
the Majority Report ignores several Republican examples,
including some cases where laundering schemes have been
acknowledged by the donors or proven in court. Several
Republican examples involving Simon Fireman (a national Vice
Chair of the Dole campaign), officers and employees of Empire
Landfill, and DeLuca Liquor and Wine are mentioned in Chapter
22 of the Minority Report.
The Majority Report also fails to discuss third-party
contributions as a systemic problem that could perhaps be
addressed through legislative reform, regulatory reform, or
improved vetting of contributions by political parties and
candidates.
fundraising and political activities of the national parties and
administrations
Although the national political parties play a central role
in the federal election process, the Majority Report does not
contain a detailed, balanced discussion of the two parties.
Instead, it is largely a diatribe against the Democratic
National Committee. Using evidence in a highly dubious manner,
it examines coordination of election activities among the White
House, the Democratic National Committee (``DNC''), and the
Clinton Campaign (Chapter 2), the DNC's system to check the
legality and appropriateness of contributions, fundraising in
the White House, fundraising phone calls made from the White
House, the vetting of individuals with access to the President,
DNC donor Johnny Chung, and DNC donor Roger Tamraz.
A fundamental problem with many of these chapters is that
they characterize certain activities as illegal without citing
any legal authorities for this position. In fact, many of the
practices--notably coordination between the White House and the
DNC--appear to be acceptable under the current campaign finance
laws.
Moreover, the Majority Report states and implies that many
activities were unique to the Democrats. As shown in the
Minority Report, the Republican National Committee similarly
coordinated with the Dole for President campaign. See Minority
Chapter 33. The Minority Report also discusses how Republicans
have used access to public officials as a fundraising tool and
have used federal property for fundraising purposes (see
Minority Chapter 28). Regarding the vetting issue, the Minority
Report notes that in the 1992 and 1994 election cycles the
Republican National Committee took the position that it had no
legal duty to review contributions (see Minority Chapter 25).
The Minority Report also presents evidence that a number of
controversial individuals met with Republican Presidents at the
White House and at other events (see Minority Chapters 6 and
31). Finally, the Minority Report contains detailed discussions
of the Republican Party's close coordination with--and
financial support to--several supposedly ``independent'' and
``nonpartisan'' nonprofit groups (see Minority Chapters 10 and
11).
allegations of quid pro quo
A major goal of our campaign finance laws is to curb
corruption and the appearance of corruption, as the Supreme
Court recognized in Buckley v. Valeo. When political campaigns
are financed with private money, there is always a risk of quid
pro quos. Examples of alleged quid pro quos to Democratic
contributors are discussed in Majority chapters regarding the
DNC and Indian Gaming, the Hudson Casino, and the Cheyenne-
Arapaho contributions.
It is seldom easy to prove a quid pro quo, and inquiries
into alleged quid pro quos tend to rely heavily on
circumstantial evidence. Nonetheless, the extent to which the
Majority Report reaches its conclusions by marrying innuendo to
coincidence is startling. In its chapter detailing the DNC's
efforts to raise money from the Indian gaming community, the
Majority candidly acknowledges that, except for two instances--
the Hudson casino matter and the Cheyenne Arapaho matter--it
was unable to investigate whether ``there was any connection
between the financial support to the Democratic party and the
Interior decisions. . . .'' Nevertheless, the Majority goes on
to imply that numerous contributions received from Indian
tribes involved in gaming were all given in expectation of
specific government actions and that these expectations were
fulfilled. The factual bases for these conspiratorial
suspicions, by the Majority's own admission, amount to nothing
more than ``troubling coincidences.'' Indeed, this chapter is
so insubstantial that it resembles nothing so much as an
outline created at the beginning of an investigation rather
than a final product purchased at a cost of well over $3
million in taxpayer money.
One chapter of the Majority Report deals with Interior
Secretary Bruce Babbitt's supposed involvement in the decision
to deny an application to take land into trust for a gambling
casino in Hudson, Wisconsin--a community which strongly opposed
such a use. That community opposition--a crucial factor in
Interior's decision--is scarcely mentioned in the Majority
report, along with the fact that the tribes who sought to
locate the casino in Hudson lived on reservations located 80 to
190 miles away. Even more disturbing is the Majority's
insistence on interpreting evidence and documents in ways that
are uniformly contradicted by the sworn testimony of the career
Interior employees and officials involved. The Majority not
only fails to resolve these contradictions, it does not even
mention the great weight of testimony that contradicts the
Majority's interpretation of events.
Finally, in its chapter on political contributions made by
the Cheyenne-Arapaho Tribes, the Majority reaches the
condescending conclusion that these tribes' expressions of
political support, including contributions, for the Democratic
Party were the result of their naivete and political
gullibility at the hands of manipulative Democratic
fundraisers. In spinning this tale, the Majority Report
studiously ignores the ample evidence that these tribes were
sophisticated, politically aware, and made a hard-headed
calculation that the Democratic Party would likely assist them
in prevailing over Republican politicians who, in siding with
powerful oil and gas interests, consistently obstructed the
tribes' efforts to regain lands that they considered to be
rightfully theirs.
The Minority Report's chapters on the Hudson Casino and the
Cheyenne-Arapaho Tribes demonstrate that the evidence does not
support the quid pro quo allegations contained in the Majority
Report (see Minority Chapters 35 and 37). The Minority Report
also discusses the Republican Party's ties to one of its
biggest sources of funds: the tobacco industry (see Minority
Chapter 36).
process
The Majority Report covers the origins and procedures of
the Committee's investigation into the 1996 election by
focusing almost exclusively on document production by the White
House and the Democratic National Committee, which are the
subjects of two separate chapters. A third chapter of the
Majority Report discusses the compliance of nonprofit groups
that were subpoenaed by the Committee. Although the Majority
castigates all entities that did not comply with subpoenas, the
most pointed criticism is directed at the AFL-CIO. There is no
particular overarching theme that ties these chapters together,
except for a general refrain that Democratic individuals,
entities, organizations, and sympathizers tried to thwart the
Committee's investigation.
While the Majority discusses the history and debate over
Senate Resolution 39, which clearly stipulated that the Special
Investigation was to be conducted on a bipartisan basis, the
Majority spends the bulk of its chapter on procedural issues
lamenting the deadlines imposed unanimously by the full Senate
as the reason the Committee was not able to pursue enforcement
of its subpoenas. Moreover, while the Majority's chapter on
compliance by nonprofit groups does mention some of the
Republican entities that failed to comply with subpoenas, it
fails to discuss the Republican National Committee, the Dole
campaign, the National Policy Forum, Americans for Tax Reform,
and Triad, all of which were among the first entities
subpoenaed by the Committee and all of which failed to comply
fully with subpoenas. Several individuals associated with
conservative groups failed to appear for depositions; others
appeared but refused to answer any substantive questions. The
Majority does not even mention that the Republican National
Committee--alone among the dozens of entities subpoenaed--
unilaterally redacted as much as one third of all the documents
it produced.
The massive obstruction of the Committee's investigation
should never have been tolerated; indeed, the damage done to
this body's investigative authority as a result of that failure
may be the longest standing legacy of this investigation.
Obstruction of the Committee began, however, not with the AFL-
CIO, as the Majority has often asserted, but in July when the
National Policy Forum willfully refused to obey an order issued
by the Chairman to produce documents pursuant to subpoena. No
effort was made to hold the National Policy Forum in contempt
of the Senate, and on September 3, eight groups, including the
Christian Coalition and the National Right to Life Committee,
notified the Committee that they would not produce documents.
On September 8, Triad Management and its affiliated
organizations notified the Committee that its employees,
officers, and directors who were under personal subpoenas to
appear and answer questions would refuse to do so. While
Ranking Minority Member Glenn repeatedly expressed a
willingness to support a finding of contempt against all
entities not in compliance with Committee subpoenas, no motion
for contempt was ever brought before the Committee by the
Chairman.
A detailed response to each Majority chapter follows.
Majority Report Chapter 2: Procedural Background and Overview
The Majority Report lays out a procedural chronology and an
overview of the investigation. The Majority also presents its
view of the conduct of the investigation and the impact the
Majority believes the deadline had on the investigation as a
whole. Finally, the Majority summarizes the issues addressed in
testimony the Committee received in public hearings and issues
addressed in its Report.
While addressing the procedural history of the Committee's
investigation, the Majority seizes yet another opportunity to
highlight its version of ``Democratic obstruction'' including
harsh criticism of the White House and DNC for what the
Majority calls ``poor'' productions. In addition, the Majority
claims the Committee's deadline for ending the investigation--
unanimously agreed upon by the full Senate--precluded
procedural enforcement proceedings regarding Committee
subpoenas.
The Majority Report states that one of the main
purposes of the investigation was to let the public ``know what
went on during the 1996 campaign,'' when, in fact, the Majority
only investigated what happened in Democratic fundraising
circles during that time. The Majority neglects to mention that
the Minority requested only six of the 32 days of public
hearing time to present evidence of Republican fundraising
transgressions and was granted only three. Had the Minority
been allowed the additional three days it repeatedly requested,
the American people would have received a fuller picture of
``what went on during the 1996 campaign.''
While the Majority Report complains numerous times
about the deadline imposed on the investigation, it fails to
mention statements by Democrats that consideration of
reauthorization of the budget of the Committee would be
appropriate if the investigation had not been completed by the
end date, December 31, 1996. Every Member of the Committee--
Republican and Democrat--voted for S. Res. 39, the Resolution
authorizing the investigation, which included the
deadline.1 Committee Democrats also stated publicly
that they would have voted for enforcement of all of our
subpoenas and orders, including those against Democrats, if
enforcement was sought regarding all Committee
subpoenas.2 However, such motions were never brought
to a Committee vote.
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\1\ Congressional Record vote No. 29, pp. S2124-2125. The vote was
99-0.
\2\ Senator Glenn, 10/8/97, hrg., pp. 73-74.
---------------------------------------------------------------------------
The Majority Report claims that the decision not
to enforce the Committee's subpoenas was at least partially
based on a dearth of resources. While the Minority respects the
Majority's wish not to waste taxpayer monies, nearly $1 million
of the original $4.35 million authorized by the Senate remained
at the end of the investigation.
The Majority Report claims that ``Committee staff
. . . conducted over 200 witness interviews'' yet fails to
mention that at least 20 of these interviews were conducted
unilaterally by the Majority. Some of these unilateral
interviews were with witnesses who later testified at Committee
hearings and some witness affidavits were received that were
never shared with the Minority.3
---------------------------------------------------------------------------
\3\ See Appendix of Unilateral Interviews Conducted by the
Majority.
---------------------------------------------------------------------------
Response to Majority Chapter 4: ``The Thirst for Money''
In this chapter, the Majority places blame for all
problematic contributions received by the DNC on an insatiable
``thirst for money'' emanating from the White House. The
ability to raise funds, however, is clearly an essential factor
in any election campaign. During the 1996 elections, a
Democratic President was running for re-election confronted by
a Republican Party that had outraised and outspent the
Democratic Party in all recent election cycles. Consequently,
the Majority's conclusion that the Democratic Party felt
pressure to raise funds for the 1996 election is a statement of
the obvious. In reaching its conclusion, the Majority alleges
violations of law without providing supporting facts or legal
citations, ignores the costs of federal elections, and ignores
the fact that the Republican Party again out-raised and out-
spent the Democratic Party in 1996.
The Majority asserts that the DNC and the Clinton
campaign violated campaign laws in their coordinated effort to
raise money, but provides no facts or legal citations to
support such a conclusion.
The premise of this chapter--that the need to
raise advertising money caused the ``panoply of DNC fundraising
irregularities''--rests on a single incorrect statement. The
Majority claims that ``[d]ue to the DNC's need to feed the
advertising beast [that was planned following the November 1994
Democratic losses in Congressional elections], it dismantled
its process for vetting contributions.'' In fact, the DNC's
system for checking contributions was changed in May of 1994,
five months before the November 1994 elections and over a year
before the idea for a large scale DNC advertising campaign was
first conceived.
The Majority focuses entirely on fundraising by
the Democratic Party, and fails to mention that the Republican
Party also broke all previous records in 1996, raising almost
$100 million more than Democrats. The Majority ignores the fact
that in the 1996 election cycle, the RNC out-raised (and out-
spent) the DNC by nearly $100 million, with the RNC raising
$306 million and the DNC raising $212 million.4
---------------------------------------------------------------------------
\4\ Federal Election Commission press release FEC Reports Major
Increase in party fundraising, 3/17/97, available at www.fec.gov.
---------------------------------------------------------------------------
The Majority ignores the across-the-board
explosion of money raised in the 1996 election. The Majority
also ignores the fact that in 1996, the national parties
together raised and spent almost 900 million dollars, a 43
percent increase over the 1992 presidential election
cycle.5 The Majority's characterization of the
Democratic Party as having a ``thirst for money,'' fails to
take into account that in the 20 years since the campaign
finance laws took effect, total hard money raised by both
parties has jumped from $110 million to $658
million.6
---------------------------------------------------------------------------
\5\ Federal Election Commission press release FEC Reports Major
Increase in Party Fundraising, 3/17/97, available at www.fec.gov.
\6\ Federal Election Commission press release FEC Reports Major
Increase in Party Fundraising, 3/17/97, available at www.fec.gov.
---------------------------------------------------------------------------
Response to Majority Report Chapter 5: ``Coordination Among the White
House, DNC and Clinton Campaign''
In this chapter, the Majority purports to present a
detailed chronology of coordination among the White House, the
Democratic National Committee (``DNC''), and the Clinton
campaign during the 1996 elections and concludes that this
coordination was illegal. The Majority, however, fails to
provide legal support for this conclusion. The Majority also
makes no reference to a virtually identical advertising
campaign coordinated between the RNC and the Dole campaign.
The Majority incorrectly claims that coordination
between the White House, DNC, and the Clinton campaign
organization violated the law. Despite the unsupported
conclusions drawn by the Majority, federal statutes,
regulations, and legal precedent establish that coordination
between a political party and the party's candidates and
campaigns is legal, appropriate, and expected.7 For
example, the Majority spends several pages on the sharing of
polling information between the party and the campaign when FEC
regulations specifically permit the allocation of the costs of
polling after a poll is conducted, and multiple campaigns and
organizations routinely share the costs of polling.8
The FEC has also issued an opinion that parties may create and
air issue advertisements that do not count as spending on
behalf of particular candidates if the advertisements ``focus
on national legislative activity and promote the . . . party,''
and that advertisements that name particular federal candidates
may still qualify as issue advertisements.9
---------------------------------------------------------------------------
\7\ For a detailed legal analysis see Chapters 24 and 32 of the
Minority Report.
\8\ 11 CFR section 106.4.
\9\ FEC Advisory Opinion 1995-25.
---------------------------------------------------------------------------
The Majority asserts that coordination between
White House staff and both the Clinton campaign and the DNC was
``unprecedented,'' when, in fact, similar coordination occurred
in previous Republican administrations. President Clinton's
former Deputy Chief of Staff Harold Ickes testified at length
about the roles played by White House staff in both re-election
campaigns and party affairs during both the Bush and Reagan
Administrations.10 Ickes noted that in 1992,
President Bush appointed James Baker as White House chief of
staff and also charged him with running the Bush-Quayle re-
election effort.11 Bush campaign manager Fred Malek
said at the time, ``[Baker] knows how to run a campaign, and he
knows how to run a White House, and I think he'll bring the two
together in a very good fashion.'' 12 Outgoing White
House Chief of Staff Samuel Skinner said, ``Jim is the logical
choice to be chief of staff if he's also going to be the
national campaign manager.'' 13 Baker held twice
daily campaign meetings in his White House office. Baker did
the same in 1988, serving as White House chief of staff while
running then Vice President Bush's campaign for the presidency.
---------------------------------------------------------------------------
\10\ Harold Ickes Opening Statement, Hrg. 10/7/97.
\11\ See Minority Chapter 32; Harold Ickes, 10/7/97 Hrg., pp. 86-
90.
\12\ Christian Science Monitor, 8/19/92.
\13\ Chicago Sun-Times, 8/18/92.
---------------------------------------------------------------------------
The Majority mistakenly asserts that political
consultants involved in the DNC advertising campaign were given
insufficient legal guidance. DNC General Counsel Joseph Sandler
and Clinton-Gore counsel Lyn Utrecht not only personally
approved every advertising script and sat in on meetings to
draft advertising, they also provided detailed guidelines to
consultants working on the advertising. The guidelines ensured
that the advertising did not contain express advocacy, required
that advertising relate to important legislative issues, and
required that the advertising express the view of the
Administration and the Democratic Party. The guidelines also
set restrictions on the timing of advertisements, precluded
advertising during the general election, and forbade
advertising in a state within six weeks of a primary, and set
restrictions on use of the likeness or image of Republican
candidates.14 Campaign consultant Dick Morris
complained that the lawyers were ``obsessively'' concerned with
following the law: [T]hey would bend over backward in ways that
I considered ridiculous to comply with what would have been
[an] overly conservative interpretation of the
law.15
---------------------------------------------------------------------------
\14\ Richard Morris deposition, 8/20/97, pp. 143-44. The guidelines
established by counsel were presumably directed at ensuring that the
advertising did not contain an electioneering message, a currently
undefined standard.
\15\ Richard Morris deposition, 8/20/97, p. 410.
---------------------------------------------------------------------------
The Majority fails to note that the RNC conducted
a virtually indistinguishable ad campaign that had the intended
effect of promoting the Presidential campaign of former-Senator
Bob Dole, and was closely coordinated with Dole campaign
officials and consultants. See Minority Report Chapter 33.
Response to Majority Report Chapter 6: ``The DNC Dismantled Its System
for Vetting Contributions''
In this chapter, the Majority attempts to paint a picture
of a DNC which consciously disregarded the law. The Majority
asserts that the DNC's vetting system was fatally flawed
because ``the fundraisers did not understand that they were to
be the first line of defense against illegal contributions''
and because there was a conflict of interest for fundraisers
due to the fact that ``fundraisers want to raise money, not
reject it.'' The Majority, however, ignores contrary evidence
before the Committee.
The Majority falsely implies that the DNC
completely abandoned its system for vetting contributions.
Although the DNC did stop conducting LEXIS/NEXIS searches on
contributors to determine their ``appropriateness,'' the DNC
continued to successfully vet the vast majority of
contributions to determine their legality.
The Majority Report unfairly concludes that ``no
one thought to restore the vetting process, as that might slow
or limit the money flowing to the DNC.'' The Majority cites no
testimony or documentary evidence to support this conclusion
which implies that the DNC purposely dismantled its vetting
system to allow receipt of illegal contributions. In fact, the
conclusion ignores testimony that the DNC general counsel's
office consistently vetted for legality and that contributions
were, in fact, not accepted by the DNC.16
---------------------------------------------------------------------------
\16\ Joseph E. Sandler deposition, 5/15/97, pp. 75-76; Joseph E.
Sandler deposition, 5/30/97, pp. 130-132.
---------------------------------------------------------------------------
Response to Majority Report Chapter 7: ``DNC Fundraising in the White
House: Coffees, Overnights and Other Events''
In this chapter, the Majority is harshly critical of the
Democratic National Committee for organizing ``coffees'' at the
White House and other events for supporters of the President.
The coffees are characterized as fundraising events, and the
Majority repeats the allegation by one coffee attendee that
funds were solicited at one of the coffees. The Majority also
criticizes the DNC and White House for inviting some campaign
contributors to stay overnight at the White House.
The Majority's treatment of these subjects is seriously
flawed. For one thing, it fosters the false impression that
these practices were unprecedented. The Majority condemns the
coffees and overnights without ever saying these practices were
illegal. Nor does it allege that they were improper because
they involved providing access to contributors or the use of
federal property for fundraising purposes. If the Majority had
made that point, it might have been forced to condemn the
Republican National Committee and a series of Republican
candidates on the same grounds.
The Majority Report incorrectly concludes that
because ``almost one-third'' of those who attended White House
coffees contributed within a month, the coffees were
fundraisers. Although this statistic is used to make the case
that the coffees were fundraising events, a more logical
inference is that they were not fundraisers. After all, more
than two-thirds of the attendees contributed nothing to the DNC
within a month of the coffee. In addition, the Majority fails
to mention that several coffee attendees contributed nothing to
the DNC during the entire 1996 election cycle. 17
---------------------------------------------------------------------------
\17\ Exhibit 2049M: Minority-created chart detailing the finding
that a number of attendees at a November 9, 1995 coffee never
contributed to the DNC during the 1996 election cycle.
---------------------------------------------------------------------------
The Majority condemns the coffees and overnights
and implies that these practices were unprecedented when, in
fact, they were not. The Majority fails to mention that donors
were frequently invited to the Reagan White House and Bush
White House to motivate them to contribute to the Republican
National Committee and Republican campaigns. These events are
discussed in more detail in Chapter 28 of the Minority Report.
The Majority fails to mention that of the over
1,000 people who attended coffees at the White House, Karl
Jackson stands alone in his accusation of a solicitation at a
coffee.
The Majority unfairly asserts that Karl Jackson's
Republican ties have no bearing on his credibility while
asserting that the Democratic ties of witnesses who contradict
him make those witnesses less credible. The Majority barely
mentions that Karl Jackson--the only coffee attendee to claim
that he was solicited--is a Republican with strong ties to the
Bush White House and business ties to former Vice President Dan
Quayle. From 1991 to early 1993, Jackson served as Quayle's
National Security Advisor and he currently is connected with
Quayle in private business.18 The Majority credits
the testimony of this one former Bush Administration official
but explains away the contradictory testimony of other
attendees with ties to the Democratic Party. The Majority
states that these individuals ``claimed not to recall hearing
Huang solicit DNC contributions'' because ``their memory may be
influenced by their strong affiliations with the DNC, the White
House, or both.'' The Majority's statement that the witnesses
who contradict Jackson ``claimed not to recall'' Huang's
solicitation mischaracterizes their testimony. In fact, all the
witnesses listed above testified that they were not solicited
at this or any other coffee.
---------------------------------------------------------------------------
\18\ See Los Angeles Times, 10/10/94; Financial Times, 9/6/93;
Business Times, 6/28/94.
---------------------------------------------------------------------------
Response to Majority Report Chapter 8: ``Fundraising Calls From the
White House''
The Majority concludes that the Vice President violated the
law by making fundraising phone calls to raise money for the
DNC's issue advocacy campaign in 1995. The Majority asserts
that the Vice President violated the Pendleton Act, an 1883 law
that prohibits certain solicitation on federal property,
because he made calls from his office in the White House
complex and because the DNC deposited a portion of the funds he
solicited into hard money accounts.
The Majority incorrectly asserts that the Vice
President violated the Pendleton Act which prohibits
solicitation of contributions within the meaning of the Federal
Election Campaign Act (``FECA'') on federal property, and
condemns the failure to appoint an independent counsel on this
basis.19 The Pendleton Act was enacted in 1883 to
protect federal workers from coerced campaign contributions.
The government has not prosecuted a case under the act since
1954 and have never prosecuted a case in a situation, like that
of the Vice President's, where fundraising calls were placed to
a non-federal employee outside the workplace.20
After a thorough examination of the facts surrounding these
calls and the applicable law, the Attorney General issued a
lengthy opinion finding that there was insufficient evidence
that the Vice President had violated the Pendleton
Act.21 The Majority's contrary conclusion--based on
less information--and virtually no analysis of the applicable
law is unpersuasive.
---------------------------------------------------------------------------
\19\ The Pendleton Act, 18 U.S.C. Sec. 607.
\20\ Washington Post, 10/2/97.
\21\ See In Re Albert Gore Jr., Notification to the Court Pursuant
to 28 U.S.C. Sec. 592(b) of Results of Preliminary Investigation, Dec.
2, 1997.
---------------------------------------------------------------------------
Even though the Pendleton Act does not apply to
the solicitation of soft money, the Majority nonetheless
attempts to argue that the Vice President's solicitation of
soft money violated the Act. It is undisputed that in 1995, the
Vice President made calls to contributors asking for donations
of soft money for the DNC's issue advocacy campaign. Under the
Federal Election Campaign Act, contributions of soft money are
not considered ``contributions'' as defined under FECA and
therefore the Pendleton Act does not apply to the solicitation
of such contributions. The Majority claims, however, that soft
money contributions should now be considered ``contributions''
under the Federal Election Campaign Act. However, the law is
clear that the term ``contribution'' as defined by 2 U.S.C.
Sec. 431(8)(A)(i) is exactly equivalent to ``hard money,''
money raised and spent pursuant to the requirements and
restrictions of federal law.
The Majority asserts that the Vice President
actually solicited hard money contributions, despite the
evidence to the contrary. The Majority relies on an FEC
regulation that states that if a federal ``campaign'' is
mentioned in a solicitation, it is presumed that the solicited
funds will be used for federal election purposes through ``hard
money,'' unless the presumption is rebutted.22 In
the case of the Vice President, this presumption is easily
rebutted by the facts gathered by the Committee. The Committee
interviewed 45 individuals who likely received phone calls from
the Vice President. Of those, none ``state[d] that the Vice
President explicitly or implicitly asked them to give money to
the DNC's federal account [hard money] or to any federal
political campaign.'' 23 In fact, most of those
interviewed stated that if any specific purpose of the money
was mentioned at all, it was the DNC's soft money issue
advocacy campaign. Furthermore, the evidence establishes, and
the Majority acknowledges, that during the phone calls, the
Vice President solicited amounts of funds that could only be
soft money because they exceeded the limit on the amount any
individual may contribute in hard dollars.
---------------------------------------------------------------------------
\22\ 11 CFR Sec. 102.5(a)(3).
\23\ FBI Interviews.
---------------------------------------------------------------------------
The Majority unfairly insists that, even if the
Vice President did not solicit hard money, he may have known
that a portion of some contributions he solicited would be
deposited by the DNC into its hard money contribution account.
It is established that the DNC at times deposited the first
$20,000 of contributions received from a variety of
contributors into hard money accounts without notifying or
receiving permission from the contributors. The Majority
alleges that the Vice President may have known about this
practice because one DNC memorandum that was attached to
another memorandum and forwarded to his office stated generally
that contributors are permitted to give their first $20,000 in
contributions in hard money. There is no evidence, however,
that the Vice President personally reviewed this memorandum or
that he would have any reason to know of this practice at the
DNC.24 The Attorney General also concluded in
determining not to appoint an independent counsel that the Vice
President did not have independent detailed knowledge regarding
how the DNC processed and deposited contributions.25
---------------------------------------------------------------------------
\24\ In an interview with the Attorney General, the Vice President
stated that he did not recall seeing a memo that stated the DNC would
treat the first $20,000 of any contribution as hard money. See In Re
Albert Gore Jr., Notification to the Court Pursuant to 28 U.S.C.
Sec. 592(b) of Results of Preliminary Investigation, Dec. 2, 1997.
\25\ See In Re Albert Gore Jr., Notification to the Court Pursuant
to 28 U.S.C. Sec. 592(b) of Results of Preliminary Investigation, Dec.
2, 1997.
---------------------------------------------------------------------------
The Majority generally asserts that the Vice
President violated the law by soliciting contributions from his
White House Office. The Majority fails to note that the Hatch
Act specifically exempts both the President and the Vice
President, as well as Members of Congress, from the general
prohibition on solicitation of campaign contributions
26 and that former and current Republican presidents
and leaders have also solicited funds from federal property.
The Majority also ignores the facts that at least one
Republican President, Ronald Reagan, made solicitation phone
calls from the White House and that other Republicans have
acknowledged that they have raised funds from federal property.
See Chapter 28 of this Minority Report.
---------------------------------------------------------------------------
\26\ 5 U.S.C. Sec. 7323.
---------------------------------------------------------------------------
Response to Majority Report Chapter 9: ``White House Vetting of
Individuals With Access to the President''
In this chapter the Majority addresses the alleged failure
of the White House to appropriately screen visitors invited to
attend events at the White House with the President and Vice
President from 1993 to 1997. Although the Majority makes a
number of valid observations, its inclination to engage in
unfounded speculation and to ignore evidence of similar
procedures in Republican administrations undercuts its
credibility on this issue.
Without presenting any evidence, the Majority
Report speculates that the problems with the White House
vetting procedures from 1993 to 1997 might have been a
``conscious design for fundraising purposes.'' There is no
evidence to support this speculative assertion, and the
Majority does not cite any such evidence.
The Majority ignores evidence obtained by the
Committee establishing that the procedures for screening
political functions at the White House have been in effect for
several administrations. A career White House employee
testified that during her 18-year tenure at the White House,
the procedures for screening political guests were the
same.27 The National Security Advisor similarly
testified that NSC procedures for providing information as part
of the screening process have been in place since the
1970s.28
---------------------------------------------------------------------------
\27\ Judith Spangler deposition, 5/9/97, pp. 39-40.
\28\ Samuel R. Berger, 9/11/97 Hrg., p. 6.
---------------------------------------------------------------------------
The Majority ignores that the system in place for
years has also resulted in a variety of individuals with
controversial backgrounds meeting with Republican Presidents.
Although the Committee's investigation of Republican vetting
was limited due to the Committee's focus on the Democratic
Party, it did uncover several examples where individuals with
controversial backgrounds were provided access to President
Bush. See Minority Report Chapter 28.
The Majority omits the fact that both the White
House and the DNC have implemented policies to formalize and
improve their procedures for assessing potential guests at most
DNC events.29
---------------------------------------------------------------------------
\29\ Exhibit 1073: New DNC Compliance Procedures and Fundraising
Manual; Exhibit 1072: Memorandum from Erskine Bowles to All Executive
Office of the President Staff, 1/21/97; Exhibit 1071: Memorandum from
Samuel R. Berger to all National Security Council staff, 6/13/97.
---------------------------------------------------------------------------
Response to Majority Report Chapter 10: ``Johnny Chung and the White
House Subway''
In this chapter, the Majority alleges that Chung's status
as a DNC donor afforded him extraordinary access to the White
House, including ``access to the President and the First Lady''
and to ``the First Lady's office.'' The chapter devotes
considerable space to a $50,000 contribution to the DNC which
Chung gave to Margaret Williams, then-Chief of Staff to the
First Lady. The Majority alleges that the $50,000 contribution
was solicited by Williams and that Chung was provided with
access to the White House as an explicit quid pro quo for this
contribution.
The Majority Report refers repeatedly to Chung's
access to ``the White House,'' misleadingly implying that he
had frequent access to the executive mansion. The Majority
Report fails to distinguish between the White House itself--the
executive mansion--and the ``White House Complex,'' a term that
includes the White House and some nearby buildings, including
the Old Executive Office Building (``OEOB''). The vast majority
of Chung's visits were to the OEOB; 30 he frequently
dropped in on Margaret Williams or her assistant, Evan
Ryan.31
---------------------------------------------------------------------------
\30\ For example, Secret Service ``WAVE'' records, which record
visits by individuals who do not hold White House passes, show that
Chung visited the White House complex 30 times in 1995 and that most of
those visits were to Williams's office in the OEOB.
\31\ Margaret Williams's and Evan Ryan's offices were located in
Room 100 of the Old Executive Office Building.
---------------------------------------------------------------------------
The Majority Report incorrectly implies that Chung
had frequent access to President and Mrs. Clinton. The evidence
before the Committee shows that Chung only met the Clintons on
a handful of occasions, usually at Democratic fundraising
events where he was one of a large number of attendees. The
references to his visits to ``the First Lady's office'' are
misleading because he actually visited the office of Margaret
Williams, the First Lady's Chief of Staff, in the Old Executive
Office Building.32
---------------------------------------------------------------------------
\32\ Evan Ryan deposition, 8/7/97, pp. 11-12: The suite of offices
in the OEOB where Williams and Ryan worked does not contain an office
for the First Lady.
---------------------------------------------------------------------------
The Majority alleges that Margaret Williams
solicited a $50,000 contribution from Chung. The Majority's
discussion of the $50,000 contribution is based largely on
unsworn allegations to journalists by Johnny Chung and it
ignores a great deal of contradictory evidence in the form of
testimony to the Committee by Margaret Williams and Evan Ryan.
The Majority also ignores Williams's testimony on the same
subject to the House Government Reform and Oversight Committee
(even though evidence presented to that Committee has been used
elsewhere in the Majority Report). For example, the Majority
Report ignores Williams's denial that she solicited the $50,000
contribution from Chung and her testimony that she initially
rebuffed him when he tried to hand her the check.33
Ultimately, according to her testimony, she decided to treat
the check the same way she had treated unsolicited checks that
had arrived in the mail: She simply forwarded it to the
DNC.34 By ignoring these and other important parts
of Williams's testimony, the Majority has created a distorted
impression of what the Committee learned about Johnny Chung.
---------------------------------------------------------------------------
\33\ Margaret Williams deposition, 5/29/97, p. 184.
\34\ Margaret Williams deposition, 5/29/97, pp. 184-86.
---------------------------------------------------------------------------
The Majority alleges that Williams provided Chung
with access to the White House as an explicit quid pro quo for
a $50,000 contribution. Regarding the alleged quid pro quo for
the $50,000 contribution, the Majority relies again, on unsworn
statements to journalists by Johnny Chung and ignores
contradictory evidence, including testimony to this Committee
by Margaret Williams and Evan Ryan. According to their
testimony, neither of them suggested to Chung that his requests
would be expedited if he contributed to the DNC. By ignoring
this evidence, the Majority has elevated press accounts over
actual evidence received by the Committee.
Response to Majority Report Chapter 11: ``The Contribution of Yogesh
Gandhi''
In this chapter, the Majority concludes that Yogesh Gandhi
was able to use a $325,000 contribution to gain access to the
President for Gandhi's own purposes. It concludes that the
contribution both originated from foreign funds and was
laundered through Gandhi. The Majority suggests that DNC
officials had concerns about the contribution at the time it
was received and concludes that DNC General Counsel Joseph
Sandler and the DNC willfully postponed returning the
contribution until after the election.
The Minority agrees that this contribution should have been
handled more carefully, but disagrees with the Majority's
presentation of the facts.
Despite evidence to the contrary, the Majority
asserts that the presentation of the Gandhi award to Clinton
was arranged well in advance of the DNC event. The evidence
obtained by the Committee indicates that the presentation of
the award to Clinton was not arranged in advance, but was
handled at the event.35 Gandhi told Committee staff
that he did not mention the award to anyone until the event,
and that he did not meet John Huang until the
event.36
---------------------------------------------------------------------------
\35\ Joseph Sandler deposition, 5/15/97, pp. 105-14. Joseph
Sandler, 9/10/97 Hrg., p. 100.
\36\ Staff Interview of Yogesh Gandhi, 3/26/97.
---------------------------------------------------------------------------
The Majority incorrectly claims that evidence
indicates that the DNC purposefully delayed return of the
Gandhi contribution until after the election. Sandler testified
that the date of the 1996 election was not a factor in the
decision to return the Gandhi contribution.37 He
returned the contribution approximately two weeks after press
allegations first surfaced raising questions about Gandhi's
solvency.38
---------------------------------------------------------------------------
\37\ Joseph Sandler deposition, 5/15/97, p. 116.
\38\ Joseph Sandler deposition, 5/15/97, pp. 116-18.
---------------------------------------------------------------------------
The Majority unfairly insists that there was
concern over the Gandhi contribution inside the DNC at the time
it was received. The Committee developed no evidence suggesting
anyone at the DNC was initially concerned about the Gandhi
contribution. DNC Finance Director Richard Sullivan actually
testified that ``John [Huang] showed me the $325,000
contribution from Gandhi, from Yogesh Gandhi, and I believe he
stated he was holding on to it until he could vet it with
Joe.'' Although Sullivan testified that Huang later told him he
had spoken to Sandler about the contribution, Sandler testified
that Huang did not bring the contribution to him for review and
that he would have remembered if Huang had done
so.39 Sullivan similarly testified that Huang
represented that at least one other contribution had been
reviewed, while Sandler testified Huang never brought it to
him.40
---------------------------------------------------------------------------
\39\ Richard Sullivan deposition, 6/5/97, pp. 37-39; Joseph
Sandler, 9/10/97 Hrg., p. 13.
\40\ Joseph Sandler, 9/10/97 Hrg., p. 13.
---------------------------------------------------------------------------
Response to Majority Report Chapter 12: ``Ted Sioeng''
In this chapter, the Majority examines political
contributions by Ted Sioeng, his family, and related business
interests in the United States. Sioeng is a wealthy Indonesian-
born businessman with extensive business interests in China.
The recipients of his contributions included the DNC, the RNC's
National Policy Forum, and Matt Fong, a Republican currently
serving as California State Treasurer. Although the Majority
acknowledges that it cannot establish any connection between
these Sioeng-related contributions and the Chinese government,
the Majority's principal conclusion is that approximately half
of the $400,000 contributed by Sioeng-related interests to the
DNC consisted of ``foreign money.''
The Majority's analysis is misleading and incomplete as to
the central question of whether any of these contributions
violated federal campaign laws. Existing law does not prohibit
using ``foreign money'' to fund federal political contributions
by individuals so long as those contributions are, in fact,
made by persons legally eligible to contribute (i.e., U.S.
citizens or legal permanent residents) with their own
funds.41 Much of the Majority's analysis of the bank
records underlying the contributions at issue completely
ignores this critical issue.
---------------------------------------------------------------------------
\41\ See Minority Report Chapters 1 and 20.
---------------------------------------------------------------------------
The Majority report ignores Jessica Elnitiarta's
contribution to the National Policy Forum (``NPF'). The
Minority Report raises troubling questions about the actual
source of the funds donated to the NPF, a de facto subsidiary
of the Republican National Committee. The day before Sioeng's
daughter, Jessica Elnitiarta, donated $50,000 to the NPF, the
Panda Industries account which funded the contribution had a
balance of only $1,300.42 That same day, Ted Sioeng
wrote a check for $50,000 from his personal account into the
account of Panda Industries.43 These transfers raise
the fair inference that Sioeng both directed and was the real
source of the NPF donation. In examining this same transaction,
the Majority overlooks the evidence that Sioeng, a nonresident
alien, probably directed the NPF contribution and, instead,
merely concludes that, based on the evidence available to the
Committee, it is impossible to determine whether Sioeng's
reimbursement of his daughter's contribution came from foreign
monies. This does not, however, remove the principal concern
raised by this contribution: that Sioeng may have directed the
contribution of $50,000 to the NPF.
---------------------------------------------------------------------------
\42\ Memorandum from Steven E. Hendershot, FBI detailee, to
Minority Counsel, re: ``Jessica Elnitiarta Record Review,'' 8/22/97.
\43\ Memorandum from Steven E. Hendershot, FBI detailee, to
Minority Counsel, re: ``Jessica Elnitiarta Record Review,'' 8/22/97.
---------------------------------------------------------------------------
The Majority also ignores that Elnitiarta's contribution to
the NPF was solicited by Steve Kinney, an aide to Speaker
Gingrich, and was collected by Kinney the day before Sioeng sat
next to Speaker Gingrich at a Beverly Hills event in
1996.44 These facts raise the strong inference that
Sioeng's seating next to the Speaker was a reward for his
daughter's contribution to NPF, but are ignored by the
Majority.
---------------------------------------------------------------------------
\44\ Memorandum from Steven E. Hendershot, FBI agent, to Senate
Investigating Team re: China Press newspaper article of 7/22/95'', 7/
23/97; Memorandum from Steven E. Hendershot, FBI detailee, to Minority
Counsel, re: ``Jessica Elnitiarta Record Review,'' 8/22/97; Staff
interview with Jessica Elnitiarta, 6/19/97; Los Angeles Times, 7/4/97.
---------------------------------------------------------------------------
The Majority ignores the crucial legal questions
regarding Sioeng-related contributions because it focuses
solely on identifying possible ``foreign money'' sources of
those political contributions. As noted above, a U.S. citizen
or legal permanent resident, such as Sioeng's daughter and his
associates, can make contributions funded entirely by ``foreign
money'' so long as the money belongs to the donor and the donor
of record is actually the person making the contribution
decision, not simply acting as a conduit for
others.45 The issue of whether part of the monies
contributed to Fong comes from overseas is not nearly as
significant as the fact that Fong actively solicited a $100,000
contribution from Sioeng, a person ineligible to donate,
personally received a check for $30,000 from him, and failed to
ascertain whether Sioeng was eligible to contribute. Fong then
unpersuasively testified that he thought that Sioeng was making
a contribution on behalf of one of his sons--which would still
be illegal as a contribution in the name of
another.46 Indeed, the Majority Report contains no
reference whatsoever to the deposition testimony which Fong
provided to the Committee.
---------------------------------------------------------------------------
\45\ See Minority Report Chapters 1 and 20.
\46\ Minority Report Chapter 7: Ted Sioeng.
---------------------------------------------------------------------------
Without sufficient evidence, the Majority
characterizes a $50,000 contribution to the DNC from Kent La, a
business associate of Sioeng's, as Sioeng-related. The Majority
suggests that Sioeng may have directed this contribution; it
bases this on La's characterization of Jessica Elnitiarta (in a
telephone interview) as his ``supervisor.'' 47 This
is an extremely slender reed upon which to ascribe La's
contribution to Ted Sioeng. The Majority failed to mention
another Committee interview in which La's wife described the
contribution at issue: ``La advised that after she and her
husband learned from Jessica [Elnitiarta] that Ted Sioeng had
made a big donation to the President, La's husband decided to
do the same. La advised that another reason they gave money to
President Clinton was because the President supported trade
increases with China and granted favorite nation status to
China. La advised that no one forced or coerced them into
donating the money.'' 48
---------------------------------------------------------------------------
\47\ The factual support for the Majority's contention that La
described Elnitiarta as his ``supervisor'' is exceedingly unclear. The
Majority's characterization of La's statements is not supported by the
only report of a telephone interview with La that is known to the
Minority. On May 13, 1997 FBI detailee Steven E. Hendershot contacted
Kent La and, because La's English was ``not very good,'' conducted an
interview in Chinese. Memorandum from Steven E. Hendershot to Senate
Investigative Team re: Contact with Kent La, 5/14/97. During that
interview, La offered no characterization of his business relationship
with Elnitiarta. Id. There are no records of any additional FBI
interviews of La and it is unlikely, given La's lack of English
fluency, that members of the Majority staff could have conducted such
an interview.
\48\ Memorandum from FBI detailee Vo Duong Tran to Senate
Investigative Team re: Interview of Nancy La, 5/25/97.
---------------------------------------------------------------------------
The Majority also notes that it sought to depose La, but
was unable to get the Minority's approval for the issuance of
the subpoena. The resulting unstated inference--that the
Minority's failure to approve the proposed subpoena was
motivated by a desire to obstruct the Committee's
investigation--is unfair and inaccurate. What the Majority
Report failed to explain was that a subpoena to La had already
been issued with the Minority's approval, but that the Majority
came to discover it had issued an invalid subpoena which
mistakenly named La's cousin, Vinh B. La.49 When the
Majority proposed to re-issue corrected subpoenas for both Kent
La and Vinh B. La, the Minority sought equivalent technical
corrections of subpoenas that had been issued to RNC officials.
When the Majority made it clear that it was unwilling to extend
the Minority the courtesy of reciprocal technical corrections
on subpoenas already issued, the Minority declined to approve
the requested subpoenas for Kent La and Vinh B.
La.50 The Majority had the authority to vote to
issue the requested subpoenas over the Minority's objections,
but did not do so.51
---------------------------------------------------------------------------
\49\ Letter from Laura S. Shores, counsel to Kent La, to Majority
Counsel, re: Kent La, 11/6/97.
\50\ The text of Senator Glenn's 11/19/97 letter to Chairman
Thompson on this matter is as follows:
---------------------------------------------------------------------------
Pursuant to the Rules of the Governmental Affairs
Committee, I am writing to object to the Majority's
proposed issuance of two subpoenas--a corrected subpoena
for Vinh B. La and a new subpoena for Kent La. I do so
reluctantly because I have no interest in impeding the
legitimate course of the investigation. I am compelled to
object, however, because precisely the same requests by the
minority for subpoenas to correct alleged technical defects
have been ignored and effectively denied. For example, The
Committee issued deposition subpoenas for Curt Anderson and
Jill Hanson that asked for depositions on dates that had
already passed by the time that service was effected. The
Minority has twice unsuccessfully sought to have these
technical defects corrected by new subpoenas. On another
occasion, we detailed for the Majority how Martin
Weinstein, counsel for several RNC officials, misled the
Committee about his representation of Tim Barnes and caused
the Committee to serve a deposition subpoena on Mr.
Weinstein rather than his actual counsel, Mr. Burchfield.
Our request that a corrected subpoena be served on Mr.
Barnes was ignored.
The Minority has asked your staff to correct these
subpoenas at the same time that your requested subpoenas
are issued, but have received no response. Under these
circumstances, I am compelled to object to the issuance of
the Majority's proposed subpoenas to Vinh B. La and Kent
La.
\51\ Memorandum from Majority Counsel Michael Bopp to Chief
Minority Counsel Alan Baron re: Notice of Deposition Subpoenas, 11/14/
97.
---------------------------------------------------------------------------
The Majority's unwillingness to explore Sioeng's
dealings with Republican candidates contrasts starkly with its
willingness to use bank records to tie Sioeng to Chinese
government officials. In one notable instance, the Majority
appears to have overreached considerably in suggesting that a
$10,000 check made out to the ``O.C. Chinese Friendship Ass.''
in 1995 ``may have been intended for an organization called the
Overseas Friendship Association'' which the Majority Report
describes as an instrument of the Chinese Communist Party. From
the Minority's perspective, a more reasonable interpretation
(at least one that takes into account the ``C'' following the
``O'') is that Sioeng donated this $10,000 to a slightly more
benign organization: the Orange County (``O.C.'') Chinese
Friendship Association.
Response to Majority Report Chapter 13: ``Huang's Years at Lippo''
In this chapter, the Majority suggests that the Lippo
Group's shifting focus from Indonesia to the emerging markets
of the People's Republic of China over the last five years
indicates that the Lippo Group has a suspicious relationship
with the Chinese Government. The Majority also claims that John
Huang engaged in a pattern of illegal political contributions
on behalf of the Lippo Group.
The Majority provides scant evidence for its conclusions,
however, and ignores much evidence to the contrary.
Based on scant evidence, the Majority asserts that
Lippo Group joint venture partner China Resources is a
corporate agent of espionage for the government of China. The
only evidence developed by the Committee indicates that the
Lippo Group has a business relationship with China Resources, a
major conglomerate owned by the Chinese government that acts as
a licensed intermediary for outside businesses doing business
in China.52 The Majority fails to mention, for
example, that according to a 1992 estimate, China Resources has
29 wholly owned subsidiaries and ``hundreds'' of joint
ventures, including ventures with U.S.
corporations.53 While there have been allegations
that China Resources engages in intelligence gathering on
behalf of the Chinese Government, no evidence has been
developed that suggests that the Lippo Group has ever acted as
agent of China Resources or provided any intelligence
information to the Chinese Government.54
---------------------------------------------------------------------------
\52\ Thomas Hampson, 7/15/97 Hrg. pp. 67-68.
\53\ Xinhua wire service, 11/10/92. On 2/7/96, the Harris
Corporation, an NYSE-listed company, issued a press release announcing
that it had been awarded a $2.7 million contract to supply radio
terminals to a Northwest Electric Power Group, an electric company in
the PRC. The press release states that China Resources National
Corporation, a branch of China Resources Group, represented Northwest
Electric Power. The press release described China Resources National
Corporation as ``an import/export company that acts as a licensed
intermediary for outside companies doing business in China.'' A 6/26/85
press release of the Universal Satellite Corp., a public company based
in New York, announced a contract to sell high-resolution television
projectors to Strong Progress Ltd., a subsidiary of China Resources
Group of Hong Kong.
\54\ According to the Los Angeles Times, the Riady family issued a
statement in February of 1998 explaining the nature of their commercial
relationship with China Resources and asserting that they have not
``gathered classified information or [performed] other intelligence
operations'' in the course of their dealings with international
partners. Los Angeles Times, 2/23/98. In addition, the classified
information provided to the Committee supports the conclusion only that
the Riadys' relationship with the Chinese Government involved normal
business dealings within China.
---------------------------------------------------------------------------
The Majority asserts that an audiotape of a DNC
event attended by the Vice President indicates that Huang may
have arranged a White House meeting between Vice President Gore
and the vice chairman of China Resources, Shen Jueren. The
Majorityalleges that Huang may have arranged three ``meetings''
between Shen Jueren and the Vice President--a ``meeting'' in the White
House on Friday, September 24, 1993; a ``meeting'' at a California law
firm in the afternoon of Monday, September 27, 1993; and a ``meeting''
at a DNC event in California later that same Monday. There is scant
evidence, however, to support these alleged ``meetings.'' The meeting
on Friday was a short visit with the Vice President's Chief of Staff,
not the Vice President; 55 and the meeting on Monday in the
afternoon was with approximately 25 Asian Americans and Shen Jueren was
not listed as an attendee.56 Finally, the meeting on Friday
evening was in fact a DNC ``Reception/Dinner'' attended by
approximately 50 individuals, including Shen Jueren. The Vice President
was not seated at the same table as Shen at this event.57
Despite the documentary evidence, the Majority relies on an alleged
exchange captured on audiotape at the law firm event to argue that on
the previous Friday, a White House meeting may have occurred. This
audiotape is largely inaudible but appears to reflect that at the law
firm event, an individual stated that ``Kevin said he met you last
Friday and I also come.'' 58 The tape does not seem to refer
to Shen, nor, more importantly, was Shen listed as in attendance at
that afternoon event.59 The Majority's reliance on this tape
to allege a meeting, despite all evidence to the contrary, is
unpersuasive.
---------------------------------------------------------------------------
\55\ White House Communications Agency audio tape, 9/27/93, Letter
to Jack Quinn, 10/7/93, EOP 49490.
\56\ List of attendees at 9/27/93 afternoon event, EOP 965-969.
\57\ Briefing papers and attendees for DNC ``Reception/Dinner,'' 9/
27/93, 6:00 p.m., EOP 962-964.
\58\ White House Communications Agency audio tape, 9/27/93.
\59\ List of attendees at 9/27/93 afternoon event, EOP 965-969; In
addition, even if the reference of ``Kevin'' is to Shen Jueren, the
individual could very well have been speaking to the Vice President's
Chief of Staff, Jack Quinn, who accompanied the Vice President to the
law firm event and who had briefly met Shen Jueren the Friday before
that event.
---------------------------------------------------------------------------
The Majority implies that John Huang improperly
transmitted information to members of the Lippo Group and to
the Chinese government, despite insufficient evidence. The
Committee developed no evidence that Huang ever mishandled or
passed classified or other sensitive information. Moreover,
evidence gathered by the Committee indicates that Huang's
contacts with Lippo employees were for administrative or
personal reasons.60 For example, James Per Lee, the
current president of Lippo Bank in California testified in his
deposition that he had investigated the approximately 200 calls
exchanged between Huang and Los Angeles-based Lippo employees
and concluded that these calls were routine and brief. Per Lee
testified that the calls were exchanges primarily between Huang
and the bank's executive secretary in order to relay messages
of calls received, and that calls to other employees concerned
such matters as important bank clients, an appearance by Huang
in a Chinese New Year's parade, and administrative matters
dealing with the domestic subsidiaries.61 After Per
Lee's deposition, the Majority abruptly canceled his scheduled
appearance before the Committee 62 and fails in its
Report to recognize the Lee's deposition testimony.
---------------------------------------------------------------------------
\60\ Among one summary of Huang's ``Lippo contacts'' were calls
placed from Huang's Glendale home to the home of Lippo bank employee
Ken Yuen, although Mr. Yuen testified in deposition that his wife was
friends with Jane Huang. Ken Yuen deposition, 4/30/97, p. 23. No
attempt was made to determine if Huang was in Glendale or Washington at
the time such ``contacts'' occurred.
\61\ James Per Lee deposition, 5/2/97, pp. 93-102.
\62\ Harold Arthur, 7/15/97 Hrg., pp. 140-141.
---------------------------------------------------------------------------
The Majority incorrectly asserts that three 1993
contributions from Lippo subsidiaries in the United States to
the DNC were reimbursed with foreign funds. There is no
evidence to support the Majority claim that three contributions
to the DNC in September 1993 from three Lippo-owned California
corporations were reimbursed with funds from abroad. Documents
suggest that the contributions consisted of income generated in
the U.S. For example, the Committee discovered a reimbursement
request for a 1992 contribution from Hip Hing Holdings, but did
not discover similar requests for the 1993 contributions,
despite reviewing all such reimbursement requests for the
relevant time period.63 In addition, contrary to the
Majority's assertions, administrator Juliana Utomo did not
testify that these contributions were reimbursed from
Indonesia.64 And finally, unlike the domestic income
generated for the 1992 contribution, the domestic income
generated for each of the three companies that contributed in
1993 was more than sufficient to make the contributions from
those funds.65 The Majority's assertion that the
1993 contributions were reimbursed by funds from Indonesia has
no evidentiary support.
---------------------------------------------------------------------------
\63\ Lippo Group holding companies requests for reimbursement of
expenses from August to December 1993, HHH 0236-37.
\64\ Juliana Utomo, 7/15/97 Hrg., pp. 12-15.
\65\ Exhibit 105. During the July 15 hearing, Senator Thompson
referred to an Advisory Opinion issued by the Federal Election
Commission, the summary of which states that ``in order for a
contribution to be legal, a domestic subsidiary must make contributions
out of net profits.'' Advisory Opinion 1992-16. While the Opinion holds
it is proper for the particular domestic subsidiary seeking the Opinion
to make contributions from its net profits, it does advise whether
contributions from the net income of a domestic subsidiary operating at
a loss are permissible. See legal analysis in Chapter 1, supra.
---------------------------------------------------------------------------
The Majority asserts that the Lippo Bank of
California is controlled by the Lippo Group from abroad. In
public testimony before the Committee, former bank President
Harold Arthur testified the bank is owned and controlled by
James Riady and managed by the Bank's Board. Arthur testified,
``To the extent that any company controlled by a Riady family
member is included within the portfolio of companies and
investments under the common name of The Lippo Group, it could
be argued that it is part of the Lippo Group. However, . . .
the Bank is neither a subsidiary, nor a division of, nor
controlled by, any company, group, partnership trust or other
person or entity within the Lippo Group or otherwise.''
66
---------------------------------------------------------------------------
\66\ Harold Arthur, Opening Statement, 7/15/97 Hrg., p. 10.
---------------------------------------------------------------------------
Response to Majority Report Chapter 14: ``Huang at Commerce''
In this chapter, the Majority attempts to suggest that John
Huang, while employed at the Department of Commerce, was a spy
for the Riadys's Lippo Group, and, by extension, the Chinese
government. After first implying that Huang was purposefully
and carefully restricted from policy matters relating to China,
the Majority then suggests that Huang improperly accessed and
misused classified materials. The Majority also makes a point
of noting that the Committee's work was complicated by Huang's
refusal to cooperate.
The Majority fails to note, however, that Huang had offered
to testify before the Committee without any restrictions as to
allegations that he had engaged in espionage.67 The
rest of the Majority's conclusions are similarly based on
ignoring or mischaracterizing evidence before the Committee.
---------------------------------------------------------------------------
\67\ Opening Statement of Senator Glenn, 7/8/97 Hrg., pp. 30-34.
---------------------------------------------------------------------------
The Majority's assertion that it could not
adequately investigate Huang's role at Commerce because Huang
refused to cooperate with the Committee is partially correct.
The Majority ignores the fact that the Committee took dozens of
depositions, received thousands of documents and held public
hearings on Huang's role while at Commerce.
The Majority asserts that Huang was excluded from
policy-making at the Department of Commerce because he ``was
not capable of doing the work.'' In fact, Huang was not
explicitly excluded from any policy area or from receiving any
policy-related information. Huang was hired by his immediate
supervisor Charles Meissner to fulfill a primarily
administrative position with the concurrence of Undersecretary
of International Trade, Jeffrey Garten.68 While
Huang played a limited policy role at Commerce, this was
primarily due to the administrative nature of his position and
inter-department tension. Responsibility for high-profile areas
was vested primarily at the Undersecretary and Deputy
Undersecretary level, two levels above Huang.69 No
directive of any sort was ever issued by any of Huang's
superiors that Huang was to be restricted from access to any
policy area, including China, or that he be ``walled off.''
70 Huang was also never restricted, implicitly or
explicitly, from receiving information regarding any particular
country.
---------------------------------------------------------------------------
\68\ Jeffrey Garten, 7/16/97 Hrg., pp. 120-21.
\69\ Jeffrey Garten, 7/16/97 Hrg., p. 122.
\70\ Jeffrey Garten, 7/16/97 Hrg., p. 122, 137.
---------------------------------------------------------------------------
The Majority asserts that the Department of
Commerce security clearance procedures were inadequate and that
``warning signs'' pertaining to Huang were ignored. In fact,
procedures used for Huang's clearance were identical to every
other political appointee and no issues were uncovered in this
investigation to suggest that Huang should have been denied a
security clearance. Several issues relating to issuance of the
clearances follow:
The Majority asserts that the Clinton
Administration initiated the policy of granting all Department
of Commerce Officials an interim clearance. In fact, the policy
of granting all political employees interim clearances was
determined by career Department of Commerce Officials and not
by political appointees or other Administration
officials.71 Although interim clearances had been
issued in previous administrations, Steven Garmon, a career
employee was then the Director of the Department of Commerce
Security Office, instituted a policy of automatically granting
interim clearances to all appointees in reaction to criticism
which had been leveled at the Security Office in previous
administrations over the delays political appointees had faced
in obtaining their clearances and their consequent inability to
attend certain meetings or receive certain
information.72 The policy was changed by Secretary
William Daley in February 1997.
---------------------------------------------------------------------------
\71\ Steven Garmon deposition, 5/23/97, pp. 25-27; Paul Buskirk
deposition, 6/3/97, pp. 31-35.
\72\ Steven Garmon deposition, 5/23/97, pp. 33-34.
---------------------------------------------------------------------------
The Majority asserts that a background check prior
to issuance of Huang's interim security clearances showed that
he had been ``arrested or detained,'' and contends the finding
was not followed up. In fact, Huang was never arrested or
detained, and the NCIC record was reviewed by the agent
handling the Huang clearance and by his superior, Security
Office Deputy Director, Paul Buskirk.73 Buskirk
determined that the Immigration and Naturalization Service
entry was within days of Huang's marriage in 1972, and was
likely a fingerprint check as a part of the initiation of
Huang's application for citizenship.74 Buskirk's
determination is supported by INS records produced to the
Committee that indicate Huang was fingerprinted prior to being
granted permanent resident status and was never arrested or
detained.
---------------------------------------------------------------------------
\73\ Joseph Burns deposition, 5/23/97, pp. 55-56.
\74\ Paul Buskirk deposition, 6/3/97, pp. 53-54.
---------------------------------------------------------------------------
The Majority asserts that the lack of an overseas
background check of Huang has left unresolved questions about
Huang's contacts with the Chinese government. An overseas
investigation was not conducted because the Office of Personnel
Management determined that it was not necessary based on the
fact that Huang had emigrated from Taiwan in 1969 and had been
living in the U.S. since that time. Moreover, no derogatory
information was discovered in the domestic background
investigation.75
---------------------------------------------------------------------------
\75\ Letter to Rep. Larry Combest from James King, Director of OPM,
10/30/96.
---------------------------------------------------------------------------
The Majority asserts that an OPM investigator made
a notation on Huang's file that signified he was a ``potential
security problem,'' and that this notation was ignored by the
Department of Commerce Security Office. In fact, the ``E''
notation on a security file refers to unresolved issues such as
a medical problem, not to indicate a potential security risk.
No evidence was found in OPM's background check on Huang that
related to loyalty, terrorism, dishonesty in the application or
examination process, felony offenses, liquor law violations,
employment information, or even disturbing the
peace.76
---------------------------------------------------------------------------
\76\ Federal Investigative Programs Manual, Office of Personnel
Management, 1991. The Majority could not have regarded this as a
serious issue as the Minority was never notified of the interview of
the OPM staff person, and no witness was questioned about the ``E''
notation.
---------------------------------------------------------------------------
The Majority implies that Huang may have
improperly accessed classified information while at the
Department of Commerce or received classified information
beyond his 18-month tenure at Commerce. In fact, there is no
evidence that Huang ever improperly accessed classified
information or accessed any classified information outside of
his 18 months of employment at the Department of Commerce. None
of the intelligence officials questioned by the Committee
indicated that there was any evidence of mishandling of
classified information on the part of John Huang.77
---------------------------------------------------------------------------
\77\ 7/16/97 Hrg., pp. 222-227.
---------------------------------------------------------------------------
The Majority asserts that Huang had access to
unprecedented amounts of classified information. In fact, Huang
repeatedly declined access to additional classified information
and received less classified material than either his
predecessor or other individuals at his level. Huang turned
down the suggestion of Meissner and Security Officer Bob
Gallagher that he get an SCI clearance, a level above top
secret.78 Huang also never developed his cable
profile to receive anything other that cables at the secret
level addressed directly to him.79 Huang's
predecessor Rick Johnston received more frequent briefings and
more extensive information than John Huang.80
Testimony established that Huang's role, while primarily
administrative, required him to be able to make informed
decisions on a variety of policy issues about which he received
classified information.81
---------------------------------------------------------------------------
\78\ Robert Gallagher deposition, 5/30/97, p. 13.
\79\ Staff Interview with Lewis Williams, 6/12/97.
\80\ Staff interview of Richard Johnston, Jr., 6/12/97.
\81\ David Rothkopf deposition, 6/2/97, p. 30.
---------------------------------------------------------------------------
The Majority asserts that Huang's use of the
Washington D.C. office of Stephens, Inc. is ``cloaked in
mystery,'' and implies that Huang's visits to Stephens were
used to pass secret information to outsiders. Although the
details of Huang's visits to the Stephen's office are not fully
known to the Committee, the Majority neglected to request the
appearance at public hearings of those individuals with
knowledge of these details. For example, the Majority did not
call as a witness Vernon Weaver, the head of the Washington
office of Stephens, Inc., although Weaver had explained to the
Committee in an interview the uses of the Stephens office.
Weaver explained that Huang had used the office before he began
employment at Commerce, that other people used the office, and
that Weaver in turn used an office in the Lippo Bank when he
was in California.82 Rather than call Weaver as a
witness, the Majority instead called Paula Greene, a secretary
at the Stephens office, although she was not able to provide
similar information.83 The Majority is correct that
the purpose of Huang's visits is unclear, but it is unfair to
cast this ambiguity in the most sinister light possible.
---------------------------------------------------------------------------
\82\ Staff Interview of Vernon Weaver.
\83\ Paula Greene, 7/17/97 Hrg.
---------------------------------------------------------------------------
The Majority asserts that Huang arranged a meeting
between Weaver and California State Treasurer Matt Fong which
resulted in Stephens receiving business from the State of
California. The Majority appears to rely exclusively on Huang's
agenda in making this assertion. Neither Fong nor Weaver were
ever questioned about this meeting or the business relationship
between Stephens and the state although Fong was deposed and
Weaver was interviewed by Committee staff.
response to majority report chapter 15: ``john huang moves from
commerce to the dnc''
In this chapter, the Majority goes to great lengths to
imply that there was something sinister in the hiring of John
Huang by the Democratic National Committee (``DNC''). The
Majority repeatedly asserts that Huang was hired based upon the
President's intervention on his behalf.
The Majority's conclusions are not supported by accurate
descriptions of the testimony and omit critical facts. There is
no evidence that Huang's hiring was suspicious, that it was
part of an effort to raise foreign money, or that the
President's involvement in the process was either significant
or inappropriate.
The Majority falsely implies that there was
something inappropriate about the President being involved with
Huang's move to the DNC to raise money in the Asian American
community. The Majority's discussion of the President's
``involvement'' in Huang's hiring is misleading and a
distortion of the facts. As noted below, the President did not
play a ``central role'' in Huang's hiring, but even if he had,
as the leader of his party, it is perfectly appropriate for the
President to take an interest in DNC personnel matters,
particularly when the DNC was reaching out to a new community,
Asian-Americans. Nor does the fact that Huang was hired to
raise money in the Asian-American community mean that there was
a plan to funnel foreign money into federal elections. With the
November 1995 initiation of the Asian Pacific American
Leadership Council, the DNC was formally reaching out to a new
community; 84 previously, the DNC had established
fundraising and outreach programs in other minority communities
such as in the Hispanic, African-American, and Jewish
communities, and it also had fundraising and outreach to
women's groups.85
---------------------------------------------------------------------------
\84\ Donald L. Fowler deposition, 5/21/97, pp. 190-191; Richard L.
Sullivan deposition, 6/5/97, pp. 12-13.
\85\ Richard L. Sullivan deposition, 6/5/97, p. 9.
---------------------------------------------------------------------------
The Majority's claim that the President ``played a
central role'' in Huang's hiring is supported by misleading,
and inaccurately characterized testimony. The Majority cites to
press accounts and unsworn interviews to describe a
conversation between DNC Finance Chairman Marvin Rosen and the
President relating to Huang, despite the fact that the
Committee deposed Rosen and therefore sworn testimony was
available. The Majority fails to mention that Rosen stated in
his deposition that his conversation with the President
regarding Huang was ``very brief, seconds of time.''
86 The Majority's conclusion that ``the President
himself intervened'' with the DNC to hire Huang is supported
only by this brief conversation that occurred when the
President happened to see Rosen in the receiving line at a
fundraiser. In addition, DNC National Chairman Don Fowler
testified that he personally made the decision to hire Huang,
without consulting anyone from the White House and without
knowledge of the President speaking to Rosen.87
---------------------------------------------------------------------------
\86\ Marvin S. Rosen deposition, 5/19/97, pp. 139-140.
\87\ Donald L. Fowler deposition, 5/19/97, p. 171.
---------------------------------------------------------------------------
The Majority Report falsely implies that Huang
received no training. Despite a discussion about Huang's hiring
and conversations about his training (and additional discussion
of this subject in other chapters), the Majority fails to
mention the uncontested fact that Huang was trained. The
Majority extensively investigated this issue, asking numerous
witnesses about Huang's training and developed a significant
record that clearly establishes that Huang was trained. Huang
was placed at a group training session by fellow Finance
staffer and office mate Sam Newman; 88 a copy of the
DNC's legal guidelines for fundraising was found in his files;
89 DNC General Counsel Joseph Sandler testified that
after reviewing checks with Huang after a fundraising event,
Sandler determined that Huang was familiar with the laws and
guidelines by which he was to raise money; 90 and
Sullivan testified that Sandler communicated this to
him.91 Despite this uncontested record developed by
the Majority, there is absolutely no mention of these facts in
the Majority Report, which instead focuses on discussions
before Huang was hired regarding the type of training that
Huang should receive. These omissions leave the reader with the
false impression that Huang was not trained.
---------------------------------------------------------------------------
\88\ Samuel Newman deposition, 7/17/97, pp. 142-143.
\89\ Joseph E. Sandler, 9/10/97 Hrg., p. 13.
\90\ Joseph E. Sandler deposition, 8/21/97, p. 17. Sandler also
testified that he communicated this level of comfort to either DNC
Finance Director Richard Sullivan or DNC Treasurer Scott Pastrick.
\91\ Richard L. Sullivan deposition, 6/5/97, p. 23.
---------------------------------------------------------------------------
response to majority report chapter 16: ``john huang's illegal
fundraising at the dnc''
In this chapter, the Majority discusses Huang's fundraising
while at the DNC. The Majority states that there were concerns
regarding Huang's fundraising before he even undertook his
first event and concludes that Huang's involvement in and/or
organization of several events should have been a ``warning
sign'' for the DNC.
In so doing, however, the Majority draws conclusions that
are not supported by the evidence.
The Majority Report falsely claims that there is
``contradictory testimony on whether Sandler trained Huang.''
The testimony is absolutely consistent that Huang was trained
(see Response to Majority Chapter 15). In this chapter the
Majority tries to exploit a minor contradiction regarding the
``type'' of training Huang received--the training given to all
DNC fundraisers or a special training just for Huang. Even this
contradiction has been reconciled in testimony before the
Committee: former DNC Finance Director Richard Sullivan's
understanding that Huang received private training
92 most likely resulted from the session in which
Sandler reviewed checks with Huang after his first
event.93
---------------------------------------------------------------------------
\92\ Richard L. Sullivan deposition, 6/5/97, pp. 23-24.
\93\ Joseph E. Sandler deposition, 8/21/97, p. 15.
---------------------------------------------------------------------------
The Majority Report illogically asserts that
contributions solicited by Huang and returned by him in March
of 1996 were a ``warning sign.'' Far from being evidence that
Huang was acting improperly, Huang's returns of contributions
suggest that he knew the rules and was following them by
initiating the return of funds he believed to be problematic.
The Majority Report fails to mention the lack of
any corroboration of Rawein Soberano's statements regarding
Huang and the DNC. The alleged lunch between Soberano and Huang
is not noted on Soberano's calendar, and Soberano says there
was no credit card, reservation, or other documentary evidence
of his lunch.\94\ Moreover, the Minority discovered that the
Majority made undisclosed failed attempts to corroborate
Soberano's story. When the Minority called the Organization of
Chinese Americans to determine whether Huang was registered for
its June 1996 conference in San Francisco (at which Soberano
claimed that he saw Huang), we learned that Huang was not on
the registration list, and that the Majority had (undisclosed
to the Minority) called and received the same information.
Indeed, the sole corroboration the Majority claims to have for
Soberano's story is an interview with Jerry Parker (from whom
Soberano rented office space). It should be noted that the
Majority neither notified nor invited the Minority to this
interview. The Majority also failed to provide the Minority
with either a transcript or a memorandum from this interview.
According to the Majority, Parker ``confirmed'' in this
interview that Soberano told him he had lunch with Huang. If
the Majority had, in fact, obtained corroboration of Soberano's
allegations, it is unclear why the Majority did not provide
this information to the Minority or mention the information
during the public hearing on this subject.
---------------------------------------------------------------------------
\94\ Rawlein Soberano, 9/16/97 Hrg., pp. 211-212; Rawlein Soberano
deposition, 5/13/97, pp. 29-31, 39.
---------------------------------------------------------------------------
response to majority report chapter 17: ``The Hsi Lai Temple Fundraiser
and Maria Hsia''
In this chapter, the Majority discusses the DNC-sponsored
event at the Hsi Lai Buddhist Temple in Hacienda Heights,
California. The Majority spends nearly half of the chapter
discussing the activities of Democratic activist Maria Hsia and
her associates, including DNC fundraiser John Huang. The
Majority details the contributions made by monastics since 1993
who were reimbursed by the Temple. Finally, the Majority
discusses the DNC event held at the Hsi Lai Temple on April 29,
1996, focusing on what the Majority believes the Vice President
knew and when he knew it.
The Majority's analysis is riddled with inaccuracies and
baseless conclusions. In the most serious of these conclusions,
the Majority inaccurately claims that this event was a
fundraiser, that the Vice President knew this in advance of the
event, and that he proceeded to participate in this event
despite this information.
By mischaracterizing testimony and using documents
in a misleading fashion, the Majority incorrectly asserts that
the Vice President and his staff were aware as early as January
1996 that the Hsi Lai event was to be a fundraiser. The
Majority cites to several memoranda from White House Deputy
Chief of Staff Harold Ickes to prove that the Vice President
was personally and specifically informed of amounts of money
the Temple event was intended to raise. All of these memoranda
are spreadsheets with dozens of other events and goals listed;
none specifically discusses or names the Hsi Lai Temple event.
Contrary to the Majority's assertion, the Vice President's
Deputy Chief of Staff, David Strauss, testified in his
deposition that the Vice President did not look at these
spreadsheets. There were events on those spreadsheets which
never, in fact, occurred but which stayed on the list.\95\ In
making these allegations, the Majority ignores the testimony of
all witnesses with first-hand knowledge about the scheduling
practices of the Vice President's office and about the events
that surrounded the scheduling of the Temple event, including
Strauss,\96\ Kimberly Tilley \97\ and Ladan Manteghi.\98\ In
fact, the Majority refused to call Manteghi as a public witness
despite a letter of request from every Minority Member of the
Committee. For a full discussion of these events, see Minority
Chapters 4 and 21.
---------------------------------------------------------------------------
\95\ David Strauss deposition, 8/14/97, p. 236.
\96\ David Strauss, 9/5/97 Hrg., pp. 31, 39. And see pp. 41-44
where Strauss testifies:
Q: Prior to the time that the newspaper articles appeared
in the fall of 1996, did you have any reason to believe
that anybody on the Vice President's staff had heard that
there was any fundraising engaged in by Ms. Hsia, by virtue
of a call from Mr. Huang?
A: I have no knowledge that anyone did know.
Q: Did you ever know anything about contributions having
been collected or monies having been collected prior to the
April 29th event at the Hsi Lai Temple? There has been
testimony that a certain amount of money was generated in
advance of the event.
A: I had no knowledge of that.
Q: Do you have any reason to believe that the Vice
President knew anything relative to this event, either
prior to the event or that after the event any monies had
been collected?
A: I have no reason to believe that he knew anything
about this.
\97\ Kimberly Tilley deposition, 623/97, p. 124.
\98\ Ladan Manteghi deposition, 8/26/97, pp. 53-57, 67.
---------------------------------------------------------------------------
The Majority's basis for concluding that the
Temple event was a fundraiser ignores significant evidence that
establishes that it was not. The DNC routinely organizes both
fundraisers and community outreach events since it is important
to motivate both financial and political supporters during a
campaign.\99\ At the Temple event, there was no entrance fee;
tickets were not collected or sold at the door; the speakers
did not solicit donations; and many of those who attended did
not contribute to the DNC at all.\100\ In addition, attendees
at the event confirm that it did not appear to be a fundraiser.
Charlie Woo, told Committee investigators that there was ``no
mention of money at the event.'' \101\ Mona Pasquil, DNC
Western States political director and former director of Asian-
Pacific affairs, testified that she saw no signs of
fundraising, such as a table at the door, name tags, checks
being exchanged, or solicitations for money.\102\ DNC Chairman
Fowler described it as an ``outreach event'' similar to those
he attended at churches in the 1960s; not everyone who attended
also contributed, and there were none of the typical trappings
of a fundraiser.\103\ Fowler also testified, ``[T]here were
three people who made presentations there--myself, the temple
master, and the Vice President. None of the three of us made
any reference to raising money, contributing money, giving
money before or after.'' \104\
---------------------------------------------------------------------------
\99\ See Chapter 25 of the Minority Report for further discussion
of the distinction between fundraisers and community outreach events.
\100\ Donald L. Fowler, 9/9/97 Hrg., pp. 26-29.
\101\ Staff interview of Charlie Woo, 5/30/97.
\102\ Mona Pasquil deposition, 7/30/97, pp. 59-62.
\103\ Donald L. Fowler, 9/9/97 Hrg., pp. 26-29, 71-72.
\104\ Donald L. Fowler, 9/9/97 Hrg., pp. 29.
---------------------------------------------------------------------------
Persons associated with the Temple who helped organize the
event also indicated that they did not consider the event to be
a fundraiser.\105\ Man-Ho, assistant to the Temple abbess,
testified at the hearing that Temple personnel did not focus on
fundraising during planning before the event.\106\ In her
deposition, she said that the guests ``were not required to pay
a buck for [the] luncheon. . . .'' \107\ She also told the
Committee that she did not see anything at the event that would
indicate that it was a fundraiser.\108\ The head of the Temple,
Venerable Master Hsing Yun, provided a statement to the
Committee with consistent information.\109\
---------------------------------------------------------------------------
\105\ Man-Ho Shih, 9/4/97 Hrg., p. 83; Man-Ho Shih deposition, 8/6/
97, pp. 136-146.
\106\ Buddhist nuns, 9497 Hrg., p. 143.
\107\ Man-Ho Shih deposition, 8/6/97, pp. 134-37.
\108\ Man-Ho Shihm 9/4/97 Hrg., pp. 137-139.
\109\ Statement of the Venerable Master Hsing Yun presented during
his interview with Committee investigators, 6/17/97, p. 3.
---------------------------------------------------------------------------
Ignoring this evidence, the Majority concludes that the
event was a fundraiser based on unfounded inferences:
According to the Majority's Report, Immigration and
Naturalization Service official Daniel Hesse heard references
to money raised, but what the Majority writes that he heard--
``they had raised X amount of dollars''--does not amount to a
solicitation. A solicitation is generally believed to be a
request for contributions whereas this is merely a statement of
what the DNC had raised; far from a request for funds.
Furthermore, this interview was conducted unilaterally by the
Majority, and, though the Majority cites the interview as
having occurred in August of 1997, before the Committee's
hearings on the Temple event, this information was not
introduced at the Committee's public hearing which might have
presented a fuller picture of the event.
The Majority's reliance on Sherry Shaw's assertion that she
heard a solicitation from a luncheon speaker is also not
credible; not one of the approximately 100 others in the
audience claims to have heard this. Moreover, Shaw's assertion
does not comport with Hesse's statements to the Majority or the
recollections of Charlie Woo (another attendee) or Boston Globe
reporter John Aloyisius Farrell. According to the Majority, in
addition to Shaw's statement to Committee FBI agents on May 14,
1997, Shaw submitted a sworn statement to the Committee in
August 1997 which contained this information. Again, this was
the month before Committee hearings on the Temple event, and
once again, the Majority did not divulge this material which it
believed to have been relevant to the investigation.
The Majority inaccurately states that the
solicitation of contributions by Hsia assistant Matt Gorman and
the nuns proves the Temple event was a fundraiser. While Huang
and Hsia used the event to encourage contributions to the DNC
the day after the event occurred, there is no evidence that the
DNC was aware of these activities nor do the activities
establish that the Temple event was a fundraiser.
The Majority incorrectly asserts that the Vice
President's March 15, 1996, meeting with Master Hsing Yun was
set up for the sole purpose of the Master inviting the Vice
President to the Hsi Lai Temple for a DNC event. Temple
administrator Man Ho testified that the Master was not
particularly interested in going to Washington for a possible
meeting with the Vice President.\110\ Although the meeting took
place, it lasted only 10 minutes.\111\ Briefing memos prepared
for the Vice President for the meeting do not mention a DNC
event at the Temple in April of 1996; the Master simply invited
the Vice President to visit the Temple.\112\ Moreover, there is
no evidence that a DNC event was ever discussed, and the
Majority's assertion to the contrary is nothing more than
speculation.
---------------------------------------------------------------------------
\110\ Man-Ho Shih deposition, 8/6/97, p. 96.
\111\ Statement of the Venerable Master Hsing Yun presented during
his interview with Committee investigators, 6/17/97.
\112\ David Strauss, 9/5/97 Hrg., p. 12.
---------------------------------------------------------------------------
The Majority incorrectly states that there never
really was a second event planned at a restaurant in Southern
California for April 29, 1996. While there is little
testamentary evidence that such an event was planned, this does
not prove that Huang and Hsia never contemplated such an event.
At least two documents produced by Hsia's consulting firm, Hsia
& Associates, show that such an event was contemplated by Hsia
at one time.\113\ And Charlie Woo, an attendee at the April 29,
1996 event, told Committee FBI detailees that Huang originally
invited him to attend an event at a restaurant in Southern
California and later called to tell him that the location had
been changed to the Hsi Lai Temple.\114\
---------------------------------------------------------------------------
\113\ Exhibit 772: 3/23/96 letter from Maria Hsia to the Vice
President, SEN 01719; Invitation to DNC Asian Pacific American
Leadership Council event at Harbour Village Restaurant in Monterey
Park, California; the name of the restaurant is crossed out and Hsi Lai
Temple is written in, SEN 00111.
\114\ Staff interview of Charlie Woo, 5/30/97; see also Richard
Sullivan deposition, 6/25/97, pp. 21-22.
---------------------------------------------------------------------------
The Majority concludes that the nuns' alteration
and destruction of documents constituted ``deliberate
destruction of evidence'' and was done to protect the Vice
President and Maria Hsia. After the Temple events were
publicized, two nuns involved in Temple bookkeeping and
administration altered and destroyed some documents.\115\ There
is, however, absolutely no evidence that their actions were
undertaken with the knowledge or consent of anyone at the White
House or the DNC. Nonetheless, the evidence does indicate that
at least some Temple officials were conscious of possible
wrongdoing. Yi Chu, the Temple bookkeeper, testified that she
knew the Temple could not contribute directly, in its own name,
which is why she had to go through the process of finding
individuals to write checks.\116\
---------------------------------------------------------------------------
\115\ Man-Ho Shih, 9/4/97 Hrg., pp. 34-35; Yi Chu, 9/4/97 Hrg., pp.
60-61.
\116\Yi Chu deposition, 8/7/97, p. 31.
---------------------------------------------------------------------------
The Majority falsely implies that beginning in the
1980s, Maria Hsia had inappropriate access to then-Senator Gore
based on her fundraising activities. What the Majority does not
mention is that fundraising and political outreach
organizations are not only an appropriate and legitimate means
of stimulating public interest in the democratic process, they
are also commonplace. The Majority's insinuation that when
organizations and leaders within the Asian-American community
participate in these activities, something untoward or sinister
must be involved is disturbing. In the 1980s, Hsia helped form
the Pacific Leadership Council and was an active and open
fundraiser in the Asian-American community. There is nothing
sinister about the Vice President reaching out to and raising
money in this community. Hsia was one of hundreds of people who
raised money for the Democrats throughout this country.
The Majority repeats its allegations that Maria
Hsia is an ``agent,'' without stating that the classified
information that forms the basis for this allegation--certain
activities she undertook while an immigration consultant in the
early 1990s--has no connection whatsoever to Hsia's fundraising
for the Democratic party.\117\
---------------------------------------------------------------------------
\117\ See Minority Chapter 2. See also Affidavit of Maria Hsia, 2/
98.
---------------------------------------------------------------------------
In this chapter, the Majority also takes the
opportunity to mischaracterize the Democratic Senatorial
Campaign Committee's (``DSCC's'') tally program. The Majority
falsely states that the tally program serves as a means by
which contributors can ``earmark'' large ``soft money''
contributions to particular senate candidates in circumvention
of the FECA's hard money limits. The Majority also incorrectly
suggests that the tally program was ``ultimately found to be
illegal'' and terminated. The Majority is wrong on all scores.
First, the Majority is incorrect in its characterization of the
tally program as a program that permits ``earmarking.'' In
fact, the Federal Election Commission rejected this precise
claim when it was made by the National Republican Senatorial
Committee in 1996.\118\ When it dismissed that complaint, the
FEC's general counsel stated that ``there is no evidence that
the DSCC accepted earmarked tallied contributions or pass [sic]
earmarked contributions on to the Democratic Senate candidates
in the form of coordinated party expenditures.''\119\ In fact,
an earlier agreement between the DSCC and FEC was premised on
the fact that the DSCC did not earmark tallied contributions--
although some contributors' participants in the program may
have been confused. As the FEC stated in its April 14, 1997,
letter to the DSCC dismissing the NRSC's complaint about the
tally program ``[u]nderlying the need for the remedial
requirements in the August 1995, conciliation agreement was the
belief that participants in the tally program did not
understand how the tally program differed from earmarking.''
The FEC dismissed allegations that the 1996 tally program
amounted to earmarking or violated the law.
---------------------------------------------------------------------------
\118\ See Complaint filed 9/27/96 in MUR Nos. 4490 and 4502.
\119\ MUR Nos. 4490 and 4502 at 12 (General Counsel's Report.)
---------------------------------------------------------------------------
Response to Majority Report Chapter 18: ``The China Connection: Summary
of Committee's Findings Relating to Efforts of the People's
Republic of China to Influence U.S. Policies and Elections.''
In this chapter, the Majority explains that the Committee's
investigation of campaign finance activities included both a
public examination of foreign interests connected to the U.S.
political process during the 1996 federal election cycle, and
an examination of classified information regarding possible
Chinese Government involvement in the U.S. political process.
The Majority states that the public and classified information
together warrant a number of conclusions. The Majority
identifies six individuals with ``extensive ties'' to the
Chinese Government who ``produced or facilitated foreign
campaign contributions'' from ``the Greater China area'' and
states that ``discussions took place and actions were taken
that suggest . . . that a variety of PRC entities were acting
to influence U.S. elections.'' The Majority concludes:
The Committee has learned in sobering detail of a
wide range of covert PRC efforts in the U.S. and
overseas designed to influence elections in this
country. Many of these activities may or may not have
been part of a single, coordinated effort. Regardless,
a coordinated approach may have evolved over time.
Other efforts, though undertaken by PRC government
entities, have been characterized as rogue activities.
Such fine distinctions fall beyond the scope of this
report.
Unfortunately, the Majority chapter addressing these
important issues does not lay out the information received by
the Committee and then draw clear conclusions based on that
evidence. For example, the chapter does not identify sources
for most of its conclusions or state whether the information
for those conclusions came from the Committee's public
investigation or from the Committee's review of classified
information. In fact, the vast majority of the statements made
in the Majority chapter are derived from public information
that has been available to the Committee and the public for
some time.
Another example of this obfuscation is the Majority's
identification of six individuals who it states have
``extensive'' ties to China or the Chinese Government followed
by its assertion that these ties are demonstrated by political
contributions or other activities that in fact have stronger
connections to Indonesia, Taiwan, Cambodia or Hong Kong. Having
found that there is very little evidence connecting the
individuals it has targeted to China, the Majority curiously
refers to these Asian countries and the then-British controlled
property as the ``Greater China'' area.
Along the way, the Majority chapter also makes a number of
inaccurate or exaggerated statements to support its case. The
Majority chapter contains errors in fact and characterization
even when they are based on public information. Such false and
exaggerated statements based on public information raise
significant questions about the accuracy of the Majority's
conclusions based on classified (``non-public'') information,
which is not available for independent public assessment.\120\
---------------------------------------------------------------------------
\120\ The conclusions based on classified information, as stated in
the Majority and Minority Reports, were not approved by any Executive
Branch agency. Letter from George J. Tenet, Director, Central
Intelligence Agency to Senator John Glenn, 2/18/98; Letter from George
J. Tenet to Chairman Fred Thompson, 2/18/98; Letter from Robert M.
Bryant, Deputy Director, FBI to Senator John Glenn, 2/25/98. See also
Letter from Andrew Fois, Assistant Attorney General, Department of
Justice to Chairman Fred Thompson, 7/11/97.
---------------------------------------------------------------------------
Most important is the fact that, after the Committee's
year-long investigation into the ``China Plan,'' the Majority
chapter does not provide clear or useful information to the
public. For ananalysis of the classified information received
by the Committee during its investigation, see Chapter 2 of this
Minority Report.
The Minority responds to some of the statements set forth
in the Majority chapter:
Most of the Majority's conclusions are based on
media allegations and public information that has been
available to the Committee and the public for months.
Throughout the Majority's chapter on the China Plan, there are
bold assertions about connections to Chinese Government
officials and other fundraising activities without clarifying
upon what information those assertions are based. As a result,
the Majority makes no clear statements about what conclusions
can be derived from public information presented to the
Committee and what conclusions are drawn from classified (or
``non-public'') information. This approach implies that the
Committee received more non-public information than it actually
did to support the Majority's conclusions.
The Majority's quotations of newspaper articles do
not appropriately or accurately describe information made
available directly to the Committee. Reliance in a Senate
Committee report on the media's second hand characterizations
of non-public information is unwarranted, particularly here
where the Committee had the direct information available for
its review.121
---------------------------------------------------------------------------
\121\ For example, the Majority chapter cites a February 13, 1997
Washington Post article that stated that Executive Branch agencies had
discovered information that the Chinese Government ``sought to direct
contributions from foreign sources to the Democratic National Committee
before the 1996 presidential campaign.'' Several months later, however,
the Committee received direct testimony from the Executive Branch
agencies themselves that, based on the information available at the
time, there was no indication that the China Plan was directed at
influencing the presidential race or that it had affected that race
with campaign contributions. Closed Committee Hearing, 7/28/97, pp. 41-
44, 54. The Majority chapter also cites a March 9, 1997 Washington Post
article in order to describe a 1996 FBI briefing to members of Congress
regarding the China Plan. Several months after that article appeared,
however, the Committee received direct information and testimony from
the Executive Branch agencies about this and similar briefings. Closed
Committee Hearing, 7/29/97, p. 19-12, 84.
---------------------------------------------------------------------------
The Majority's chapter on the China Plan fails to
make any clear conclusions, demonstrated by the fact that the
chapter contains 25 statements that include phrases such as
``may or may not,'' ``possibly,'' ``believed to be,''
``indicated,'' and ``suggest.''
The Majority chapter also makes a number of
contradictory assertions and also ignores, without explanation,
crucial facts regarding the foreign connections uncovered in
the Committee's investigation. Some examples are:
The Majority does not explain how
contributions from Indonesia, Taiwan, Cambodia or Hong
Kong demonstrate that the Chinese Government ``may or
may not'' have funneled money into political campaigns.
The contributions and activities listed by the Majority
in its chapter derive from a variety of independent
Asian countries. The Majority's use of the term
``Greater China'' or the ``Greater China Area'' is an
unjustifiable attempt to bend the facts to make all
connections to every Asian country look like a
connection to China.
The Majority does not explain why it has
focused exclusively on certain individuals' ``ties to
China'' without recognizing that the individuals
targeted in its chapter have equal, if not stronger,
ties to Taiwan and Indonesia. It is clear from the
Majority chapter itself that most of the individuals it
lists as having ``extensive ties'' to China or the
Chinese Government in fact have strong ties to Taiwan,
Indonesia or Hong Kong, entities not under the control
of the Chinese Government during the 1996 election
cycle. For example, John Huang was raised in Taiwan
before moving to the United States in 1969 and becoming
an American citizen; Maria Hsia was born in Taiwan and
is an American who continues to have strong family and
institutional ties to that country; and the Riadys are
Indonesians with business interests around the world.
The Majority chapter provides no explanation or
analysis of why it ignored ties to other Asian
countries in order to focus exclusively on China or why
it assumes all ties to any Asian country demonstrates a
tie to China. The Majority also provides no explanation
for why it ignored non-public information about other
countries and their political activities in the United
States. See Minority Chapter 2, Information Not Pursued
by the Committee.
The Majority ignores the contradiction in
its assertion that connections to Taiwan demonstrate
connections to China. The Majority states in its Report
that Taiwan is considered by China to be ``a rogue
province'' but nonetheless assumes that certain
individuals'' connections to Taiwan may also
demonstrate connections to China or to the China Plan.
The Majority chapter explains that a China
Plan was developed after Taiwanese President Lee's
visit to the United States in the spring of 1995, but
does not explain why a number of the activities it
highlights occurred before that time period. The
Majority states that after Taiwanese President Lee's
visit to the U.S. in 1995, the Chinese Government
``[s]ecretly'' developed a plan that went beyond
increasing lobbying efforts to include ``influencing
U.S. policies and elections through, among other means,
financing election campaigns.'' The Majority then
highlights, among other things, a 1989 trip to Taiwan
organized by Maria Hsia, 1993 political contributions
from Lippo Group subsidiaries, and 1993 ``meetings''
involving Shen Jureun. Whether these activities are
connected to the Chinese Government is one question.
Another question is why these activities are
highlighted when the Committee was informed in closed-
door proceedings that prior to 1995 and the formulation
of the so-called China Plan, the Chinese Government's
efforts to promote its interests in the United States
were focused almost exclusively on using traditional
diplomatic means.122
---------------------------------------------------------------------------
\122\ Closed Committee Hearing, 7/28/97, p. 5-6.
---------------------------------------------------------------------------
The Majority chapter also makes assertions based
on public information that are unsupported by either publicly
available or classified information. This raises serious
questions about the accuracy of the Majority's assertions that
it claims are based on classified information not available to
the public. A few examples of the Majority's misstatement and
exaggerations based on public information are:
The Majority inaccurately claims that in
September 1993, contributions to the DNC by three Lippo
Group subsidiaries located in California were `` paid
with foreign money'' from Jakarta, Indonesia. The
Majority then uses this unproven conclusion to tie the
supposed foreign contributions to ``meetings'' between
the Vice President, and John Huang and Shen Jueren.
According to the Majority, Shen is the head of a
commercial enterprise ``identified as a PRC
intelligence gathering operation.''
There are several inaccuracies in these Majority
assertions.
First, while it is true that the Committee received
evidence that in August of 1992, one subsidiary of the
Lippo Group made a $50,000 contribution to the DNC and,
according to a reimbursement requests obtained by the
Committee, the subsidiary was likely reimbursed for
this contribution from Indonesia, no such evidence was
received regarding the 1993 contributions. The
Committee reviewed the same reimbursement forms for the
three subsidiaries that contributed to the DNC in 1993
and found no document requesting reimbursement for
those checks.123 In addition, the Majority's
general citation to the testimony of a LippoBank
employee does not establish that the 1993 contribution
was reimbursed.124
---------------------------------------------------------------------------
\123\ Lippo Group holding companies requests for reimbursements of
expenses from August to December 1993, (HHH 0236-37).
\124\ See Juliana Utomo, 7/15/97, Hrg. pp. 14, 53. (Utomo did not
testify that the 1993 contributions were reimbursed and, in fact, she
did not even take over the relevant responsibility when working for
these subsidiaries until 1994.)
---------------------------------------------------------------------------
Second, the Majority apparently makes this new
allegation about the 1993 contributions so it can
falsely assert that foreign funds were connected to two
``meetings'' attended by Huang and Vice President Gore
in that same month of 1993. Even here, the Majority has
it wrong. The Majority states that ``the day after
Huang wrote'' the checks, he ``escorted Shen Jueren to
a White House meeting with Gore's chief of staff, Jack
Quinn, and may have met with Gore as well.''
125 Public documents received by the
Committee, however, establish that Huang and Shen
Jueren did not have a meeting with Vice President Gore
on that day.126 Regarding the second alleged
``meeting,'' the Majority is referring to a ``DNC
Reception/Dinner'' in Santa Monica attended by the Vice
President and approximately 50 other people. The Vice
President was not seated at the same table as
Shen.127 The Majority assertions that Shen
had a meeting in the White House with Vice President
Gore is not supported and its description of a DNC
reception and dinner as an additional ``meeting''
between Shen and Vice President Gore is a
mischaracterization of the facts.
---------------------------------------------------------------------------
\125\ The Majority chapter, as provided to the media in February
1988 and as provided to the Minority in ``final'' form on March 2,
1998, stated that ``Huang escorted Shen Jueren to a White House meeting
with Gore and his chief of staff, Jack Quinn.'' On March 3, 1998, the
Majority changed the language to assert that Huang ``may'' have met
with Vice President Gore on that day. This change was welcome, but as
described below, the Majority has continued to make this less
definitive assertion despite the fact that the evidence does not
suggest that a meeting with Vice President Gore occurred on that date.
\126\ The first ``meeting'' was in reality a ``stop by'' meeting
with Jack Quinn, a staff member in the Office of the Vice President.
Letter from Huang to Quinn, 10/07/93 (EOP 049490). In fact, despite the
Majority's assertions in its report about the possibility of a
``meeting'' with Vice President Gore, the Majority never requested the
schedules for the Vice President or Quinn on that day, or requested any
other information from the Vice President's office or Quinn about this
alleged meeting. As a result, the schedules were not received by the
Committee because they were not requested, nor are they responsive to
other Committee requests. In order to assess the Majority's new
allegation in its Report, the Minority requested documents and
information regarding the activities of that day. In addition to the
fact that Huang's letter to Quinn makes clear that Huang and Shen did
not meet with the Vice President on September 24, 1997, documents also
establish that no ``meeting'' took place. Schedule of Vice President
Gore for 9/24/93; Schedule of Jack Quinn for 9/24/93. Instead, it
appears that Huang, Shen and Shen's assistant dropped by for a visit
with Quinn. Letter from Huang to Quinn, 10/17/93 (EOP 049490).
\127\ Briefing papers for Vice President Gore, DNC Reception, 3/27/
93( EOP 000959J-64J) (approximately 50 attendees and Shen Jureaun is
not listed as one of the few people seated at the Vice President's
table.). Earlier that day, Vice President Gore met with over 20 Asian
American leaders at a Los Angeles law firm for approximately 40
minutes. In its chapter on Huang's activities while at the Lippo Bank,
the Majority asserts that an audio tape proves that Shen was present at
that event as well. However, the attendance list for that afternoon
event does not include Shen and the audio tape also does not refer to
Jueren. Briefing papers for Vice President Gore, Meeting with Asian
American Leaders, 4:35-5:15, 9/27/93 (EOP 000965-69); Audio tape, 9/27/
93, White House Communications Agency (Produced to the Committee 10/
97). See Minority Response to Majority Chapter 13.
---------------------------------------------------------------------------
Third, the Majority's description of ``China
Resources Holding,'' a company then ``head[ed]'' by
Shen Jueren who retired in 1995, as one ``identified as
a PRC intelligence-gathering operation'' is apparently
designed to imply there was contact between a Chinese
Government intelligence official and the Vice
President. In addition to falsely stating that the 1993
contributions came ``from foreign funds'' that had some
connection to ``meetings,'' the Majority's description
of China Resources Holding is also an exaggeration.
According to public information, China Resources
Holding is apparently the current name of the entity
once called, and often still referred to as, China
Resources.128 The company has been located
in Hong Kong for 50 years and engages in trading and
investment involving ``retailing, property development,
hotels and infrastructure,'' with an estimated asset
value of 6.5 to 8 billion dollars, 76 percent of which
is in Hong Kong, 17 percent in Mainland China and 7
percent overseas.129 The organization is
also known to be a Chinese Governmen-owned trading and
import/export intermediary that does business within
China as well as with foreign companies, including
American companies.130 The Minority does not
set forth any conclusions about this organization
because the Committee did not conduct a meaningful
investigation on the topic. However, the Majority's
characterization of the organization as a ``PRC
intelligence-gathering operation,'' something the
Majority also alleged during the Committee's public
hearings in July 1997,131 appears to be an
exaggeration of the facts in order to support its
unwarranted conclusion.
---------------------------------------------------------------------------
\128\ See www.chinaresources.co in the internet. The site provides
information about the group and states that China Resources Holding is
the current name of the entity once called, and often still referred to
as, China Resources.
\129\ Financial Times (London), 8/21/93; Time, 5/5/97; Washington
Post, 7/18/97; www.chinaresources.co.
\130\ Time, 5/5/97; Reuters Wire, 3/31/96, 6/26/85, 2/7/96; Xinhua
Wire, 11/10/92; Washington Post, 7/18/97.
\131\ Thomas Hampson, 7/15/97 Hrg. pp. 67-73; Senator Bennett, 7/
15/97, Hrg. pp. 67-73.
---------------------------------------------------------------------------
The Majority's statement that ``Ted Sioeng
was one of the DNC's largest contributors during the
1996 federal election cycle'' is not supported by the
evidence. The Majority states that ``Sioeng, his family
and his business enterprises contributed $400,000 to
the DNC in 1995 and 1996.'' Public records show,
however, that the $400,000 apparently attributed to
Sioeng by the Majority includes $250,000 given to the
DNC by Sioeng's adult daughter, a U.S. permanent
resident and businesswoman, or from companies that she
legally controls, and $150,000 from two individuals who
are not employed by Sioeng and who are also eligible to
contribute to the DNC.132 Although Sioeng is
associated with these individuals and attended several
DNC events with his family, there certainly is not
sufficient evidence to state that Sioeng, who is not
attributed with giving any money to the DNC, was one of
the ``largest contributors'' to the DNC in the last
election cycle.133
---------------------------------------------------------------------------
\132\ Staff interview with Jessica Elnitiarta, Sioeng's daughter,
6/19/97; Memorandum of Steven Hendershot, FBI Agent detailed to the
Committee, ``Re: Jessica Elnitiarta Record Review,'' 8/22/97; Letter
From Thomas McLish, counsel for Elnitiarta, 6/18/97; FEC Records; Other
contributions came from Subandi Tanuwidjaja and Kent La, both of whom
are associated with Sioeng and Elnitiarta, but neither of whom are
employees of Sioeng's. FEC Records; Staff interview with Jessica
Elnitiarta, 6/19/97; FBI Special Investigator interview with Kent La,
5/13/97 (La is an independent distributor who does business with
Sioeng). This interview was conducted in Chinese by an FBI agent
detailed to the Committee who transcribed the contents of the interview
in a report to the Committee dated 5/14/97. There is nothing in the
interview report that states that La works for Sioeng or that La
contributed to the DNC based on requests from Sioeng.
\133\ The Majority also states that Sioeng and his family and
business interests ``spent over $550,000 on political campaigns and
organizations in 1995 and 1996.'' This figure is derived from the
$400,000 contributed to the DNC by his daughter, her companies and
associates; $100,000 contributed to Matt Fong, a Republican California
official, apparently by Sioeng's companies in Hong King and $50,000
contributed by his daughter's company to the National Policy Forum, an
arm of the RNC. See Chapter 7 of this Minority Report.
---------------------------------------------------------------------------
The Majority's conclusion that the Chinese
Government consulate in Los Angeles gave a hotel owned
by Sioeng $3,000 ``for the purpose of making or
reimbursing'' Sioeng for a political contribution to a
California state candidate is not based on a sufficient
investigation. The Majority states that ``the Committee
has concluded'' that the Chinese Government provided
$3,000 to a hotel in California in order to reimburse
Sioeng for a $5,000 political contribution to a
Republican California state candidate. The Majority
apparently reached this conclusion based only on review
of two bank transfers.134 The Majority did
not request information from the hotel about the reason
for this $3,000 payment and it appears that the payment
may have been made to the hotel to cover expenses of a
Chinese Government television crew that stayed there in
1996.135
---------------------------------------------------------------------------
\134\ See footnotes 13 and 14 of the Majority chapter.
\135\ Los Angeles Times, 2/23/97 (stating that attorneys for the
hotel supplied billing records to verify that the hotel charges were to
cover the expenses of a Chinese government television crew in early
1996). The Committee did not request such information and therefore the
Minority is unable to reach a conclusion about the purpose of the
payment to the hotel.
---------------------------------------------------------------------------
The Majority's statement that Charlie Trie's
contributions solicited for the Presidential Legal
Trust Fund were ``ultimately'' reimbursed with money
from Taiwan and Cambodia is an exaggeration. Putting
aside the propriety of Trie's unsuccessful attempt to
provide the private trust fund with nearly $500,000 in
contributions,136 the evidence before the
Committee supports the conclusion that of the nearly
$500,000 of attempted contributions, only $70,000 came
from abroad: $40,000 from Taiwan and $30,000 from
Cambodia.137
---------------------------------------------------------------------------
\136\ In Majority Chapter 20, which discusses Charlie Trie's
attempted contributions to the Presidential Legal Expense Trust, the
Majority claims that the amount of Tries' attempted contributions was
not ``nearly $500,000,'' but instead ``$789,000.'' The Majority's
figure in this chapter is the accurate one.
\137\ Zhi Hua Dong deposition, 6/17/97, pp. 98-105. Interviews
reports and other analyses on this topic written by FBI agents on
detail to the Committee do not suggest that additional funds came from
abroad.
---------------------------------------------------------------------------
The Majority chapter's pattern of misstating
and mischaracterizing public information received by
the Committee is continued in the Majority's treatment
of classified information received by the Committee.
When the Executive Branch agencies reviewed the
portions of the Majority and Minority report regarding
the China Plan, they expressly noted that their review
was limited to deleting direct factual errors or
classified information. The agencies informed the
Committee that they did not take any position regarding
conclusory statements made by either the Majority or
the Minority based on classified
information.138 And indeed, the Minority
here responds to some of the most egregious allegations
made by the Majority against American citizens and
other individuals based on ill founded conclusions of
classified and other information.
---------------------------------------------------------------------------
\138\ The conclusions based on classified information, as stated in
the Majority and Minority Reports, were not approved by any Executive
Branch agency. Letter from George J. Tenet, Director, Central
Intelligence Agency to Senator John Glenn, 2/18/98; Letter from George
J. Tenet to Chairman Fred Thompson, 2/18/98; Letter from Robert M.
Bryant, Deputy Director, FBI to Senator John Glenn, 2/25/98. See also
Letter from Andrew Fois, Assistant Attorney General, Department of
Justice to Chairman Fred Thompson, 7/11/97.
---------------------------------------------------------------------------
The Majority's two statements about John
Huang do not show that he had ``extensive ties'' to the
Chinese Government. The Majority states that Huang is
one of six individuals identified by the Majority who
had ``extensive ties'' to the Chinese Government and
then describes two activities to support its assertion:
(1) that in 1993 Huang made a political contribution
reimbursed by funds from Indonesia and escorted Shen
Jueren to ``two meetings'' and that (2) the Committee
obtained a ``single piece of unverified information . .
. that indicates that Huang himself may possibly have
had a direct financial relationship with the PRC
government.'' The first activity is based on public
information and the factual inaccuracies of the
Majority's assertions regarding these contributions and
``meetings'' are discussed above. The second activity
highlighted by the Majority is based on non-public
information. Indeed, the facts are derived from an
unsubstantiated hearsay speculation gathered well after
Haung's campaign finance activities were extensively
publicized in the press.
The Majority's statements about Maria Hsia
also do not demonstrate ``extensive ties'' to the
Chinese Government. The Majority states that Hsia also
had ``extensive ties'' to the Chinese Government and
then lists several activities to support its assertion:
(1) a long standing relationship with the Hsi Lai
Temple in California, (2) contributions ``laundered''
through the Temple, (3) a trip to Taiwan organized by
Hsia in 1989, (4) fundraising for the Democratic Party
generally, (5) attendance at the Santa Monica
``meeting'' attended by Shen Jueren in 1993, (6)
activities considered to constitute being an agent for
the Chinese Government and (7) information that Hsia
worked with Sioeng and Huang to identify donors for the
Democratic Party. The first four activities, which are
based solely on public information, demonstrate that
Hsia has a long-standing relationship with Taiwan as
well as with a Temple in California that is both
wealthy and ardently pro-Taiwan. The fifth activity,
also based on public information, is Hsia's attendance
at a 1993 ``meeting'' with Shen Jureun. This meeting,
however, was in fact a ``DNC Reception/Dinner'' in
California attended by approximately 50 individuals.
Regarding the sixth activity mentioned by
the Majority, it should be noted that the Committee
received no information suggesting that Hsia's
fundraising activities were connected to the Chinese
Government. Indeed, the information characterized by
the Majority from the classified information regarded
some of Hsia's duties while an immigration consultant
in California in the early to mid 1990s. In an
affidavit submitted to the Committee, Hsia explains
those duties, raising doubt regarding any improper ties
to China. The allegations made by the Majority against
an American citizen without a thorough analysis of the
facts is troubling. The final activity of Hsia
described by the Majority, number seven above, is again
based on the same non-public information in which Huang
is referred, which contained a hearsay speculation
gathered well after allegations of fundraising
improprieties against these individuals were publicized
in the media.
The Majority's assertions that the Committee
uncovered connections between the Riadys and a Chinese
intelligence entity does not imply that the Riadys were
involved in foreign spy or similar intelligence
activities. The Majority's conclusions about the
Riady's business interests and their connections to
Chinese intelligence sources is based primarily on
public information presented to the Committee during
its open proceedings.139 The non-public
information received by the Committee supports the
conclusion that the Riady's business dealings may have
involved a relationship with a Chinese intelligence
entity, but does not support the implication that the
Riadys were involved in foreign spy or other similar
intelligence activity. The Minority agrees that the
Riadys have ties to China but is unable to assess
whether those ties are ``extensive'' or whether they
are appropriate ties based primarily on business
dealings within China.
---------------------------------------------------------------------------
\139\ Thomas Hampson, 7/15/97, Hrg. pp. 67-73.
---------------------------------------------------------------------------
The Majority Report's assertions regarding
Charlie Trie are based solely on public information
received by the Committee. The Majority does not make
any conclusion about Trie based on non-public
information and the Minority agrees with this decision.
For information about Trie, see Chapter 5 of the
Minority Report.
conclusion
In describing the basic elements of the China Plan, the
Majority provides information that the plan, for the most part,
contemplated legitimate activities that have been undertaken by
most other countries for years. However, in order to expand on
the plan and its significance in the 1996 election cycle, the
Majority makes a series of speculative assertions and
conclusions. The Majority strings together a number of
activities connected to several Asian countries, labels those
countries the ``Greater China Area,'' and implies or assumes
that they ``may or may not'' be related to the China Plan or
the Chinese Government. This is a necessary predicate for the
Majority to establish because the activities the Majority lists
in support of its theory have limited connections to China.
Huang's contribution though a Lippo Group subsidiary in 1993 is
connected to Indonesia; Trie's attempted contributions to the
President's Legal Expense Trust was partially reimbursed by
funds connected to Taiwan and Cambodia; Hsia's association with
the Hsi Lai Temple is connected to Taiwan; and the Riadys are
connected to Indonesia and have global business interests.
The incidents mentioned by the Majority in its China
Connection chapter that actually show any possible connection
to China are (1) alleged ``meetings'' with Shen Jueren in 1993;
(2) Hsia's immigration work on behalf of Chinese nationals, (3)
the Riady's business dealings with China Resources; (4) an
event attended by Wang Jun 140 and (4) Sioeng's
contacts and business interests in China. While these
connections are important, they are greatly exaggerated by the
Majority chapter. The Minority does not downplay the
seriousness of the allegations of foreign connections that were
exposed by the Committee's public hearings or closed
proceedings. In fact, as stated in Chapter 2 of the Minority
Report, the allegations and information raised legitimate
questions about contributions from a number of countries making
their way into the 1996 federal elections.
---------------------------------------------------------------------------
\140\ The Majority repeats its characterization of Wang Jun as a
``Chinese arms'' dealer, despite the fact that the Committee was
informed that Wang Jun is primarily associated with the Chinese
investment company CITIC, which has a board of international advisors
that includes prominent Americans. Staff interview with Robert
Suettinger, Director, Asian Affairs, National Security Council, 6/3/97.
The Minority does not make any conclusions about Wang Jun, but believes
that this repeated characterization of Wang Jun by the Majority is, at
best, simplistic.
---------------------------------------------------------------------------
The Majority's treatment of the important issue of foreign
influence in the 1996 election cycle and its highly
questionable and damaging conclusions based on the information
presented to the Committee were unfortunately driven by a
conclusion looking for supporting information that was not
available. Ultimately, the information presented to the
Committee demonstrated a number of foreign contributions making
their way into both political parties from businessmen and
companies in a variety of Asian countries. The information
submitted to the Committee to date, however, does not
demonstrate that these troubling instances were connected to a
grand scheme by the Chinese Government to influence our
electoral process.
Response to Majority Report Chapter 19: ``Charlie Trie and Ng Lap
Seng's Laundered Contributions to the DNC''
In this chapter, the Majority analyzes Charlie Trie's
contributions to the DNC and possible involvement in
contribution conduit schemes, and concludes that Trie used
foreign funds supplied by Macao businessman Ng Lap Seng to pay
for both his own contributions and to reimburse others for
making contributions to the DNC. The Majority also implies that
the DNC failed to return a conduit contribution by Xiping Wang.
The Minority generally agrees with the Majority's
conclusions in this chapter, but notes that several facts have
been omitted. For example, the Committee did not receive
evidence that most of the money Trie raised for the DNC
involved conduit funds. In addition, the Majority fails to
mention that the DNC returned the Xiping Wang contribution to
the U.S. Treasury.
The Majority concludes that Trie used foreign
funds supplied by Macao businessman Ng Lap Seng to pay for both
his own contributions and to reimburse others for making
contributions to the DNC. The Minority agrees with the
Majority's conclusion, but disagrees that ``most'' of the money
Trie raised for the DNC involved conduit funds; for example,
there is no evidence that Trie reimbursed the $325,000
contribution by Yogesh Gandhi which comprises more than half of
the funds attributed to Trie by the DNC.
The Majority suggests that the DNC has not
returned Xiping Wang's contribution. The Majority references
Xiping Wang's testimony indicating that she was not reimbursed
by the DNC for her contribution. However, the Majority fails to
note that the DNC did in fact return the contribution--it sent
the money to the United States Treasury after failing in an
attempt to locate Wang and it informed her attorney of that
fact.141
---------------------------------------------------------------------------
\141\ Letter from DNC retained counsel, Judah Best, Debevoise &
Plimpton, to R. Michael Haynes, Esq., attorney for Xiping Wang, 2/20/
98.
---------------------------------------------------------------------------
Response to Majority Report Chapter 20 : ``Charlie Trie's Contributions
to the Presidential Legal Expense Trust''
In this chapter, the Majority analyzes Charlie Trie's
fundraising efforts on behalf of the Presidential Legal Expense
Trust (``PLET'' or ``Trust''). The Majority concludes that the
donations were ``highly questionable,'' may have been
``coerced,'' and that the Trust acted improperly in how it
investigated the donations, returned them, altered the Trust's
accounting procedures, and delayed revealing the matter to the
news media. The Majority further suggests that Trie's PLET
fundraising efforts may have been linked to, among other
things, his appointment to a Presidential Commission and to his
obtaining an invitation for Wang Jun to a White House coffee.
The Majority's analysis of Trie's fundraising efforts for
PLET is deeply flawed. The Majority chapter apparently double
counts a number of the checks that Trie presented to the Trust;
notes the bipartisan, impressive credentials of the trustees,
but then ascribes partisan motives to their actions and;
speculates on linkages between the PLET donations and Trie's
Commission appointment, Wang Jun's coffee invitation.
The Majority incorrectly states that Trie
presented PLET with donations totaling $789,000. This figure
apparently double counts a number of the checks. In Trie's
first meeting with the Trust, the Trust declined to accept
checks totaling $70,000, whose deficiencies Trie promised to
correct. Bank records establish that the Trust actually
deposited $380,000.142 In Trie's second meeting, the
Trust declined to accept checks which Trie said totaled
$179,000. In a third meeting, the Trust declined to accept
checks which Trie said totaled $150,000. The $380,000 bank
deposit and the $150,000 figure Trie used in the final meeting
result in a total of $530,000, almost a third less than the
inflated figure used in the Majority chapter.
---------------------------------------------------------------------------
\142\ See Michael Cardozo, 7/30/97 Hrg., p. 7. See also Minority
Chapter 5 on Trie.
---------------------------------------------------------------------------
The Majority acknowledges the bipartisan,
impressive credentials of the Trustees, but then attributes
partisan motives to the trustees. The Majority suggests that
the trustees sought White House permission for the Trust's
actions, while failing to acknowledge testimony by the Trust's
executive director that the Trust never took direction from the
White House. The Majority also suggests that the trustees hid
the Trie-related donations to protect the President until after
the election, while failing to acknowledge that the trustees'
accounting decisions were made on a unanimous, bipartisan basis
for substantive reasons. In short, the Majority unfairly
impugns the motives of the respected, bipartisan trustees and
fails to acknowledge that the Trust acted prudently and with
restraint in declining to accept apparently eligible
contributions.
The Majority's analysis of a link between Trie's
Commission appointment and the PLET donations fails to
acknowledge the documentary evidence that Trie's appointment
was finalized before he ever met with the Trust.143
The facts do not establish any link between the PLET donations
and Trie's Commission appointment, the Wang Jun invitation, or
Trie letter. The Majority fails to cite any facts linking the
PLET donations to the DNC's decision to invite Wang Jun to a
White House coffee as Trie's guest. There is no evidence before
the Committee that the DNC personnel involved in the coffee
invitation. DNC officials David Mercer, Richard Sullivan, and
Marvin Rosen were aware of the PLET donations. In addition, the
White House personnel involved in responding to Trie's letter
to the President have stated that they handled the letter
routinely, using standard language they had developed to
respond to a host of letters on the same subject.144
The Majority chapter also fails to acknowledge testimony by FBI
detailee Jerry Campane that Trie's letter was apparently
prompted by one of his employees, had no connection to China,
and no impact on U.S. policy.145
---------------------------------------------------------------------------
\143\ See Minority Chapter 5, including analysis of a 12/15/95
White House personnel office memorandum stating that ``President
Clinton has approved'' Trie for the Commission appointment, and 2/5/96
White House legal counsel memorandum reporting successful completion of
a background check and stating that the Commission appointment of Trie
and another individual ``may proceed.'' Trie first contacted the Trust
on 3/20/96.
\144\ See Minority Chapter 5; staff interview of Robert Suettinger,
director, Asian affairs, National Security Council, 6/3/97.
\145\ See Minority Chapter 5; Jerry Campane, 7/29/97 Hrg., pp. 58,
77-78, 95; staff interview of Robert Suettinger, director, Asian
affairs, National Security Council, 6/3/97.
---------------------------------------------------------------------------
The Majority labels the donations made by members
of the Buddhist Ching Hai sect as ``highly questionable'' and,
in part, ``coerced,'' even though the majority of PLET
donations met the Trust's requirements. The Majority fails to
acknowledge the evidence that most of the donors appeared to be
U.S. citizens who contributed voluntarily to help the
President.146 The recent indictment of Trie does not
reference any questionable conduct in connection with the PLET
donations.
---------------------------------------------------------------------------
\146\ See Minority Chapter 5; see also Michael Cardozo, 7/30/97
Hrg., p. 80.; Sally Schwartz deposition, 5/6/97, p. 144; 5/9/96
memorandum from Sally Schwartz to Michael Cardozo, Document 0078.
---------------------------------------------------------------------------
Response to Majority Report Chapter 21: ``The Saga of Roger Tamraz''
In this chapter, the Majority describes Tamraz's attempts
to gain access to U. S. Government officials and concludes that
in the spring of 1996, senior U.S. Government officials looked
for ``any reason'' to support Tamraz's pipeline project based
on his political contributions to the Democratic Party. The
Majority's conclusion that Tamraz was successful at gaining
access to U.S. Government officials is correct. Before Tamraz
made political contributions to the Democratic Party, he met
with several Government officials. After he made contributions,
he attended several DNC events where senior Government
officials were in attendance.
The Majority's chapter, while containing several statements
and conclusions with whichthe Minority agrees, also contains
omissions of significant evidence, assumptions not based on evidence,
and conclusions contrary to the evidence.
The Majority Report erroneously states that the
DNC ``pressure[d] NSC officials to change their position on the
merits of Tamraz's Caspian Sea Pipeline.'' The Majority claims
for the first time in its Report that the DNC did more than
invite Tamraz to DNC events in the spring of 1996. The Majority
now claims that the DNC and the White House actually pressured
``NSC officials'' to change U.S. Government policy regarding
Tamraz's pipeline project. This assertion is contradicted by
the facts.
The Majority provides absolutely no citations for its
conclusion that seven months after U.S. policy was
implemented,147 senior Government officials were
looking for ``any reason'' to support Tamraz's pipeline
proposal. In fact, the evidence contradicts these assertions.
Tamraz testified that he mentioned his pipeline in March and
April 1996 during a brief ``introduction to the President'' and
``for about 30 seconds'' to White House official Thomas
(``Mack'') McLarty, both at DNC events.148 He
testified that he described his pipeline proposal during those
brief encounters as one that would supposedly bring peace to
the region and jobs to Americans. In response, McLarty asked
his Energy Department contact, Kyle Simpson, to provide him
with information about the pipeline project.149
---------------------------------------------------------------------------
\147\ U.S. policy was implemented in October of 1995 and Tamraz
played no role in that policy. Sheila Heslin, 9/17/97 Hrg. pp. 5-6, 19-
20, 28, 52, 72.
\148\ Mack McLarty deposition, 6/30/97, pp. 5-9; Memorandum for
Jonathan Marks to Ann Ngo, 10/25/95; E-mail from Ira Sockowitz to
Jonathan Marks, 10/27/95; Melissa Moss Deposition, 6/11/97, pp. 190-
193.
\149\ Thomas McLarty deposition, 6/30/97, p. 56; Kyle Simpson
deposition, 6/25/97, p. 26. Simpson testified that requests for
information about American companies and their projects are not
uncommon. He explained that the U.S. Government sees value in U.S.
companies participating in foreign projects although it is ``not
terribly particular'' about which U.S. company it is if more than one
is vying for a project. Kyle Simpson deposition, 6/25/97, p.54.
---------------------------------------------------------------------------
In addition, despite the assertions that this request was
based on Tamraz's political contributions, both McLarty and
Simpson testified unequivocally that they were not aware of
Tamraz's political contributions at the time of this request
nor did they mention political contributions to
anyone.150 Tamraz himself testified that he had
never mentioned political contributions to anyone in the White
House ``ever.'' 151 The Majority ignores the fact
that even Jack Carter, another Energy Department official,
testified that Simpson's request for information about the
pipeline was not, in any way, an attempt to tie alleged
information about political contributions to U.S. Government
support for, or meeting with, Tamraz.152
---------------------------------------------------------------------------
\150\ Thomas McLarty deposition, 6/30/97, pp. 30. 56-57; Kyle
Simpson, 9/18/97 Hrg. pp. 50-51; Kyle Simpson deposition, 6/25/97, pp.
43, 46-48.
\151\ Roger Tamraz, 9/18/97 Hrg. p. 73.
\152\ Jack Carter deposition, 6/23/97, pp. 44-45. The Majority
relies on Carter's testimony to assert that political contributions
motivate this request for information. However, the Majority at the
same time asserts that Carter's recollection of other issues are not
accurate. The Majority also attempts to bolster its decision to rely on
Carter's testimony by stating that Carter's ``handwritten notes of his
encounter with Simpson corroborate that they discussed Tamraz and
suggest also that Simpson made clear President Clinton's interest in
the matter.'' The statement is correct only as far as it goes. The
notes say ``do background on Tamraz'' and ``consider distance'' and
``memo to Pres.'' The notes do not contain any figures or any mention
of political contributions whatsoever. Exhibit 1199, p. JC-007 (Notes
of Jack Carter, 4/3/96).
---------------------------------------------------------------------------
Apparently recognizing that its conclusion is
unsupported by the evidence, the Majority makes several
questionable assertions in its attempt to support its assertion
that U.S. officials were ``looking for any reason'' to change
U.S. policy in the spring of 1996. The Majority unsuccessfully
attempts to cast doubt on the testimony of other witnesses
whose testimony was consistent. The Majority suggests that
Simpson's testimony about his exchange with Carter may have
been influenced by a call from McLarty and is less credible
because he attended a fundraiser in his home town of Houston.
Simpson's deposition and hearing testimony, however,
demonstrate that these suggestions are false.153 The
Majority's allegations regarding a DNC-generated list of
Tamraz's contributions also ignores the testimony of four
witnesses. McLarty, Simpson and Carter all testified that they
have never seen this list 154 and Tamraz himself
testified that he never showed the list to anybody. Tamraz also
testified that ``nobody at the White House has ever talked to
me about contributions, ever.'' 155 Finally, the
Majority's speculation that Carter was acting at the behest of
someone else fails to address the inaccuracies of the
speculation, the contrary testimony by all other witnesses, and
the documentary evidence that demonstrate what actually
occurred. See Minority Chapter 30.
---------------------------------------------------------------------------
\153\ Kyle Simpson deposition, 6/25/97, p. 83 (Simpson called
McLarty in March of 1997 in response to an answer Simpson gave to a
reporter that confused a 1995 meeting between Tamraz and Jack Carter
and McLarty's later request for information on the pipeline); Kyle
Simpson, 9/18/97, Hrg. pp. 135-38 (Simpson was given a complimentary
seat at the fundraiser during his tenure at the Energy Department and
did not raise money for the DNC while he was at the Department.)
\154\ Thomas McLarty deposition, 6/30/97, p. 30; Kyle Simpson
deposition, 6/25/97, p. 50; Jack Carter deposition, 6/23/97, p. 32.
\155\ Roger Tamraz, 9/18/97, Hrg. p. 73.
---------------------------------------------------------------------------
The Majority Report's discussion of Tamraz's
attempt to meet with the Vice President is incorrect. The
Majority recounts that at ``some point in August or early
September 1995'' the Vice President ``expressed interest in
Tamraz's pipeline and `requested that Harut Sassounian set up a
meeting about the proposal.' . . . and that ``[a]s a result,
Tamraz was invited to a breakfast with the Vice President
scheduled for October 5, 1995.'' The Majority also states that
Tamraz was disinvited from the coffee due to Sheila Heslin's
efforts, but was ``not unhappy'' because he attended a private
fundraiser on October 2, 1995 and sat at the head table with a
number of individuals, including Vice President Gore. There are
several factual misstatements in this version of events.
Although relatively minor points, the Majority's treatment of
this issue is the looseness with which the Majority handles the
facts.
The Vice President's staff did receive a request that the
Vice President meet with Sassounian and his associate, Roger
Tamraz.156 Contrary to the Majority Report, however,
the response to this request was not to invite Tamraz ``to a
breakfast with the Vice President scheduled for October 5,
1995.'' Rather, the evidence establishes that the Vice
President's staff responded by sending a memorandum to the Vice
President on September 13, 1995, suggesting that he not agree
to such a meeting.157 And in fact, after that
memorandum was sent, the Vice President's staff notified
Sassounian and Tamraz that no meeting would be scheduled. No
meeting was ever scheduled, nor did one occur.158
---------------------------------------------------------------------------
\156\ Exhibit 1127: Memorandum to the Vice President from Leon
Fuerth, 9/13/95, EOP 45766-67. The Vice President received this request
after meeting with Sassounian on August 8, 1995, not in ``early
September,'' as the Majority asserts. Exhibit 1126; Exhibit 1127; EOP
045766 and EOP 56535, 5639-40.
\157\ Exhibit 1127: Memorandum to the Vice President from Leon
Fuerth, 9/13/95, EOP 45766-67.
\158\ EOP 25006-006; 250-4; Exhibit 1135.
---------------------------------------------------------------------------
Tamraz's attendance at a October 2 private fundraising
dinner was scheduled by the DNC and, upon discovering this, the
Vice President's staff, not Heslin, caused Tamraz to be
``disinvited'' from the October 5, 1995 coffee. The DNC
organized the fundraiser on October 2 and decided whom to
invite.159 On October 3, 1995, having learned that
the DNC had invited Tamraz to an event the night before, the
Vice President's staff faxed to the DNC a copy of Vice
Presidential National Security Advisor Leon Fuerth's September
13, 1995 memorandum advising the Vice President not to meet
with Tamraz, apparently to make clear to the DNC that it should
not invite Tamraz to future events with the Vice
President.160 It was this fax that resulted in the
DNC withdrawing Tamraz's invitation to the October 5, 1995
coffee.
---------------------------------------------------------------------------
\159\ Exhibit 1136.
\160\ Exhibit 1137 and Exhibit 1138.
---------------------------------------------------------------------------
Ultimately, the assertion that the Vice President or the
DNC responded to a request for an official meeting by inviting
Tamraz to the October 5 coffee is inaccurate.
The Majority Report's description of the two phone
calls between Bob of the CIA and DNC National Chairman Donald
Fowler is incomplete. The Majority Report states that Fowler
called Bob of the CIA twice, once on October 19, 1995 and again
on December 13, 1996. The Majority states that ``Fowler was
closely engaged in efforts to contact Bob at the CIA'' and that
Fowler was not truthful in his testimony before the Committee
when he denied having any memory of calling the CIA. The
Majority analysis of these phone calls is incomplete.
First, the Majority's factual statement is correct as far
as it goes, but evidence omitted--most notable relevant
references to Bob of the CIA's deposition--casts serious doubt
on the Majority's conclusion. Regarding the October phone call,
the Majority ignores the testimony of Bob, who stated that he
called Fowler first on October 18, 1995 and left his name, and
possibly his phone numbers, with a receptionist who answered
the phone. Fowler returned the call the next day.161
There is no explanation in the Majority Report why they call
Bob's name and phone number ``classified'' in the context of
these calls.
---------------------------------------------------------------------------
\161\ Bob of the CIA deposition, 7/11/97, p. 3.
---------------------------------------------------------------------------
Second, the Majority also ignores the fact that Bob
testified that during both phone calls with Fowler his
affiliation with the CIA was never mentioned. Bob testified
that during the October phone call he was working undercover,
that he never mentioned his CIA affiliation and was ``not sure
that Fowler [knew] who he [was] talking to.''162 Bob
testified that during the December phone call he still could
``not say for certain how [Fowler] knew who he was talking to
because CIA was never mentioned.''163
---------------------------------------------------------------------------
\162\ Bob of the CIA deposition, 7/11/97, p. 6.
\163\ Bob of the CIA deposition, 7/11/97, p. 11.
---------------------------------------------------------------------------
Finally, although the Majority criticizes Bob for lobbying
the NSC's Sheila Heslin on issues regarding Tamraz, the
Majority ignores the evidence that establishes that Bob's
lobbying began in June 1995, long before Bob had his first
contact with Fowler in October of 1995. In fact, according to
Heslin, Bob's lobbying from June through October 1995 focused
on getting Tamraz's proposal accepted by the U.S. Government
and, accordingly, stopped after October of 1995, probably
because Bob was aware that U.S. policy regarding the Caspian
Sea pipeline had already been determined and Tamraz had already
been excluded.164 Fowler's contacts began after U.S.
policy was already established and were focused on gaining
information on Tamraz to permit him to attend DNC events. The
Majority's conclusion that ``Fowler was closely engaged in
efforts to contact Bob at the CIA'' is called into serious
doubt when all the evidence about their two phone conversations
is examined.
---------------------------------------------------------------------------
\164\ Sheila Heslin, 9/17/97, Hrg. p. 20; Staff interview with
Sheila Heslin, 5/28/97.
---------------------------------------------------------------------------
The Majority Report incorrectly asserts that
Tamraz was not able to obtain access to Republicans. The
Majority agrees that in the 1980s, Tamraz ``gave enough money
to become a Republican Eagle.'' However, the Majority states
that ``Tamraz received no response to his overtures from the
Reagan Administration; he could not even gain access to the
Reagan White House.'' Although Tamraz testified that he did not
visit the Reagan White House, the evidence before the Committee
shows that in 1985, the chairman of the Republican National
Committee, Frank Fahrenkopf, apparently endorsed Tamraz for a
position in the Reagan Administration by sending a letter to
Robert Tuttle, Reagan's White House Personnel Director. The
letter of endorsement was clearly based on Tamraz's political
contributions to the Republican Party.165 Tuttle
responded to the letter by requesting that the RNC forward
Tamraz's resume to the White House. Tamraz also testified that
he received two letters from President Reagan thanking him for
his contributions to the Republican Party 166 and
that during the 1980s, he had access to high level CIA
political appointees.167 As late as 1997, Tamraz was
offered meetings with Republican Senators in exchange for
contributions to the Republican Party.168
---------------------------------------------------------------------------
\165\ Roger Tamraz deposition, 5/13/97, p. 36; Roger Tamraz, 9/18/
97 Hrg. p. 18; Senator Levin, 9/18/97 Hrg. pp. 64-44; Exhibit 1064M.
\166\ Roger Tamraz deposition, 5/13/97, p. 40.
\167\ Roger Tamraz deposition, 5/13/97, pp. 11-14, 123-24; Roger
Tamraz, 9/18/97 Hrg. pp. 3-4.
\168\ Roger Tamraz, Hrg. pp. 67, 169-170; Exhibits 1065 & 1066.
---------------------------------------------------------------------------
Response to Majority Chapter 22: ``DNC Efforts to Raise Money in the
Indian Gaming Community''
In this chapter, the Majority purports to show that
favorable government action with respect to Indian gaming
issues was purchased by Native American tribes through campaign
contributions to the DNC. The Majority fails, however, to offer
proof in support of any allegedly improper quid pro quos,
choosing instead to rely on innuendo and speculation.
Contrary to assertions in the Majority Report,
contributions to Democrats by the Mashantucket Pequots had
nothing to do with defeating a proposed 35 percent tax on
Indian casinos. The Majority takes pains to suggest that the
recent success of some Indian gaming interests has created a
``perfect recipe for the solicitation of political
contributions'' because, inter alia, the government can
pressure tribes through ``its authority to impose a tax on
gaming revenues.'' The Majority then details what it views as
Democratic complicity in tribal efforts to avoid a 35 percent
tax on casino profits which was proposed as part of the 1995
budget. In a supposed example of the abuse of Government
authority, the Majority describes a meeting between DNC
National Chairman Donald Fowler and representatives of the
Mashantucket Pequot tribe of Connecticut on November 13, 1995.
Prior to that meeting, A DNC staffer wrote a briefing memo for
Fowler urging him to remind the tribal representatives that he
had ``played an active role in expressing'' tribal opposition
regarding the tax.
The Majority Report also notes that the Mashantucket
Pequots donated at least $475,000 to the DNC and to Democratic
campaigns between 1993 and 1996. (No attempt is made to show
that the tribe made a contribution close in time to the
November 13 meeting.) The Majority offers no additional
evidence in support of its suggestion that the contributions
made by the Mashantuckets to the DNC were the result of
pressure applied through the Clinton Administration's
``authority to impose a tax on gaming revenues.'' Relevant
facts which the Majority declined to include in their report
include the following: (i) the 35 percent casino tax was
proposed by Congressman Bill Archer, chairman of the House Ways
and Means Committee;169 (ii) the tax was vigorously
opposed by prominent Republicans, including Senators Pete
Domenici and John McCain.170 Moreover, by the time
of Fowler's November 13 meeting with the Mashantucket
representatives, Republican senators had already publicly
promised to oppose the casino tax in the House-Senate
conference, thereby making it highly improbable that the tribe
felt it necessary to contribute to Democratic causes in order
to kill the casino tax. Indeed, the tribe has since confirmed
that it viewed Fowler's attempt to take credit for the killing
of the tax as an exaggeration, since the tax died in a
Republican-controlled Congress.171 None of these
inconvenient facts are mentioned by the Majority.
---------------------------------------------------------------------------
\169\ New York Daily News, 6/9/97.
\170\ Albuquerque Tribune, 11/3/95; The Santa Fe New Mexican, 10/
28/95.
\171\ The Hartford Courant, 2/11/98.
---------------------------------------------------------------------------
The Majority incorrectly alleges that
contributions by the Mashantucket Pequot influenced the
Interior Department's approval of an expansion of the tribe's
already-existing casino. The most regrettable part of the
Majority's chapter suggests, in an echo of the controversy
surrounding Interior Secretary Bruce Babbitt's supposed
involvement in the Hudson casino matter, that Mashantucket
contributions influenced Interior's decision to approve two
separate expansions of the Mashantucket's existing casino over
community opposition. The Majority offers no evidence, but
simply notes that Interior approved the expansions and that the
Mashantucket Pequots made contributions to the DNC. These
contributions were not even contemporaneous with those actions,
but simply occurred within the 1996 election cycle. Indeed, the
Majority frankly acknowledges that its inferences are not
substantial: ``It is unknown if the DNC assisted the
[Mashantucket] Pequots in convincing Interior to rule in their
favor.''
The Majority unfairly attacks Interior Deputy
Secretary John Garamendi and Assistant Secretary for Indian
Affairs Kevin Gover for their tangential involvement in
fundraising activities prior to assuming their government
positions. The Majority takes Garamendi to task for having
suggested to DNC officials that they solicit Mark Nichols,
chief financial officer of the Cabazon Tribe of Mission
Indians, for a political contribution. The Majority argues that
it was ``unseemly'' for Garamendi to be involved in soliciting
money from tribal leaders over whom he would eventually
exercise authority in his government position, but the Majority
does not even contend that Nichols was told that Garamendi had
suggested him for a solicitation. As the Majority Report
acknowledges, Nichols had already committed to raising $100,000
for Clinton Campaign before being contacted by the DNC.
Ultimately, he donated a total of $125,000.
Even more attenuated is the Majority's criticism of Gover.
Over two years before being sworn in as Assistant Secretary of
Indian Affairs, Gover, along with several other attorneys
acting as advocates for tribal leaders who had been invited to
a meeting at the White House, wrote a memorandum to White House
political directors pointing out that Indian tribes had
contributed monies in the past and asking that attention be
paid to the Administration's political supporters. These facts
failed to raise significant concern during Gover's confirmation
hearing in November 1997.172 During his hearing
testimony, none of which is mentioned in the Majority Report,
Gover explained that he had long advocated greater political
involvement by American Indians. ``I believe that tribes need
to become more involved in national politics. I have preached
that message.''173 Gover explained that he also
worked on several grassroots advertising and get-out-the-vote
drives; the type of activities which he believed helped to
explain why tribes with only 9 percent of U.S. population cast
14 percent of the vote in the 1996 presidential
election.174 Following his testimony, the Chairman
of the Senate Indian Affairs Committee, Ben Nighthorse
Campbell, publicly confirmed his continued support for
Gover.175 Gover's nomination was approved by the
Committee and quickly approved by the Senate without debate,
under prodding from another supporter on that Committee,
Senator Pete Domenici.176 Whatever significance the
Majority ascribes to Gover's past activities, they posed no
obstacle to his confirmation by the Republican-controlled
Senate.
---------------------------------------------------------------------------
\172\ Albuquerque Journal, 10/31/97.
\173\ Albuquerque Journal, 10/31/97.
\174\ Albuquerque Journal, 10/31/97; The Santa Fe New Mexican, 11/
10/97.
\175\ Albuquerque Journal, 10/31/97.
\176\ The Santa Fe New Mexican, 11/10/97.
---------------------------------------------------------------------------
Response to Majority Chapter 23: ``Hudson Casino''
In this chapter, the Majority examines the circumstances
surrounding the Interior Department's denial of an application
by three Indian tribes and a gambling company to take land near
Hudson, Wisconsin, into trust for the purposes of establishing
a casino. The Majority draws the limited conclusion that
``[t]here is strong circumstantial evidence'' that Interior's
decision in the Hudson case ``was caused in large part by
improper political considerations, including the promise of
political contributions from opposition tribes.'' This
conclusion is not fully supported. The Majority Report fails to
acknowledge key facts about the Hudson casino proposal and
mischaracterizes many others.
Contrary to assertions by the Majority, Galaxy
Gaming, not the applicant tribes, was the moving force behind
the Hudson casino application. The Hudson casino application
was made by an entity known as the Four Feathers Partnership,
which consisted of three Indian tribes and another partnership
known as the Galaxy Gaming Company, headed by Fred
Havenick.177 This Florida-based gambling company
owned a money-losing dog track in Hudson, Wisconsin, and hoped
to salvage that investment by establishing a casino on the same
site in partnership with the Indian tribes. Galaxy Gaming is a
sophisticated, politically savvy entity with considerable
resources that spent significant amounts on lobbying government
officials, including its retention of Paul Eckstein, a lobbyist
with seemingly little of value to offer other than his
willingness to prevail on his personal friendship with Interior
Secretary Bruce Babbitt to secure a result for his new clients.
In 1993, Galaxy Gaming spent more money on lobbying in
Wisconsin--over $60,000--than any other gambling
entity.178 Given these facts, the Majority's
insistence on characterizing the Hudson casino matter as a
battle between ``impoverished'' Indian tribes and wealthy
lobbyists hired by the opposing tribes is unfair and
disingenuous.
---------------------------------------------------------------------------
\177\ Washington Post, 12/21/97.
\178\ Chicago Tribune, 8/5/93.
---------------------------------------------------------------------------
The Majority Report unfairly omits key facts
justifying Interior's denial of the application, such as the
distance between the applicants' reservations and the proposed
casino site. One of the most controversial aspects of the
Hudson casino application was the proposal to take into trust
land far removed from the reservations of the applicant tribes.
Although the Majority Report never mentions it, the fact that
the reservations of the applicant tribes were between 80 and
190 miles away from Hudson, Wisconsin, was critical to an
understanding of Interior's decision. Different, and far
stricter, criteria apply when an Indian tribe petitions the
government to take off-reservation land in someone else's
community into trust for gambling operations. As Secretary
Babbitt testified in the hearings before the House Committee on
Government Reform and Oversight, of the nine off-reservation
applications initially approved by the regional Bureau of
Indian Affairs office since the Indian Gaming Regulatory Act
was passed in 1988, only one led to the establishment of a
casino.179 In that case, unlike the casino proposed
in Hudson, the local community supported the
application.180 One of these denials occurred during
the Bush Administration.181
---------------------------------------------------------------------------
\179\ Testimony of Secretary Babbitt before the House Government
Reform and Oversight Committee, 1/29/98, p. 20.
\180\ Testimony of Secretary Babbitt before the House Government
Reform and Oversight Committee, 1/29/98, p. 20.
\181\ Testimony of Secretary Babbitt before the House Government
Reform and Oversight Committee, 1/29/98, p. 20.
---------------------------------------------------------------------------
The Majority Report unfairly omits key facts
justifying Interior's denial of the application, such as the
depth and intensity of local opposition to the casino. Although
the Majority makes passing references to the opposition by
persons on the local, state, and federal levels, it is
suggested that whatever local opposition existed was actually
generated by the opposing tribe's lobbying activities. Although
lobbying certainly occurred on both sides, it is unrealistic to
suggest that these lobbying efforts were primarily responsible
for the widespread opposition to the proposed Hudson casino.
The Committee's investigation found overwhelming evidence of
legitimate opposition to the casino expressed by both
Republican and Democratic elected officials on the ground that
the casino would be detrimental to the community. The
opposition was widespread, intense, and bipartisan. See
Minority Chapter 37.
The Majority Report omits key facts justifying
Interior's denial of the application, including the fact that
Interior never ``reversed course'' on the Hudson casino
application. The Majority seriously mischaracterizes the record
by suggesting that Interior was initially inclined to approve
the Hudson casino application, but changed its mind after being
subjected to ``pressure'' (through some mechanism which the
Majority is not able to identify). As the career staff at
Interior have testified, they never recommended approval of the
Hudson casino proposal. The Majority makes much of the fact
that the local Bureau of Indian Affairs office approved the
application, but fails to acknowledge that all such
applications are reviewed by Interior staff at headquarters--
pursuant to sound policy established by the Bush
Administration--to ensure consistent application of the
law.182 The Majority treats the differing
conclusions reached by the local BIA office and the Interior
Department in Washington as a matter of grave suspicion, but
refuses to acknowledge that the Interior Department has often
rejected local BIA recommendations to approve applications for
off-reservation gambling.183
---------------------------------------------------------------------------
\182\ Testimony of Secretary Babbitt before the House Government
Reform and Oversight Committee, 1/29/98, p. 20.
\183\ Testimony of Secretary Babbitt before the House Government
Reform and Oversight Committee, 1/29/98, p. 20.
---------------------------------------------------------------------------
Turning to the specifics of the Report, the Majority twists
the record in asserting that George Skibine, an Interior
Department official, ``favored granting the Hudson
application.'' This is a mischaracterization of Skibine's
testimony. Skibine first formulated his recommendation in June
1995, based on the record, and his recommendation was that the
application be denied.184 The only issue of debate
in the weeks leading up to the issuance of the decision was the
statutory basis on which to rely in denying the application,
not on whether to approve it.185
---------------------------------------------------------------------------
\184\ George Tallchief Skibine deposition, 11/17/97, pp. 49, 61-65,
70.
\185\ George Tallchief Skibine deposition, 11/17/97, p. 70.
---------------------------------------------------------------------------
The Majority relies heavily on the two memos prepared by
Tom Hartmann, a financial analyst, which concluded that,
notwithstanding the intense local opposition, there was
insufficient evidence in the record to support a finding that
the proposed casino would be ``detrimental to the surrounding
community.'' Skibine and Hartmann both testified, however, that
Skibine, the deciding official, never agreed with Hartmann's
view expressed in these memoranda and never adopted that
analysis.186 Skibine thought the application should
be denied and he initially recommended denial based on the
Indian Reorganization Act.187
---------------------------------------------------------------------------
\186\ George Tallchief Skibine deposition, 11/17/97, pp. 61-62.
\187\ George Tallchief Skibine deposition, 11/17/97, p. 151.
---------------------------------------------------------------------------
Contrary to the Majority's claim, ``reopening''
the administrative record was not an unusual step. The Majority
views with dark suspicion the agreement by two Interior
officials, in response to complaints from representatives of
the opposing tribes during a meeting in February 1995, to allow
those tribes to submit supplemental factual information to
Interior concerning the extent to which the proposed casino
would hurt their existing casinos. The Majority Report opines,
without factual support, that this ``reopening'' of the record
was ``an unusual step.'' In fact, Interior officials have
testified that there was no ``reopening'' of the record in
light of the fact that it was never formally ``closed'' prior
to the issuance of the decision. Unlike, for example, agency
rule-making, there is no formal deadline for the submission of
materials relevant to a quasi-adjudicative decision like the
trust application decision. Skibine has testified that, in
allowing the opposing tribes to submit additional information,
he simply allowed persons with relevant information to present
that information to the Department.188 Indeed, in an
order unmentioned by the Majority Report, United States
District Court Judge Barbara Crabb rejected the applicant
tribes' claims in their lawsuit against Interior that this
action was inappropriate.189 Instead, Judge Crabb
held that Interior's decision to accept the additional
information was especially justified ``when both the town of
Troy and city of Hudson had passed resolutions opposing the
project during the period between the area office's submission
of its report and the February 8 meeting.'' There was nothing
improper about Interior's decision to consider this additional
information.190
---------------------------------------------------------------------------
\188\ George Tallchief Skibine deposition, 11/17/97, p. 21
(``[T]his is an informal decision-making process. So we don't have any
regulations. There are no guidelines that apply to Central Office
action. There are no deadlines.'')
\189\ Sokaogon Chippewa Community, et al. v. Bruce C. Babbitt, et
al., 929 F. Supp. 1165, 1183 (W.D. Wisc. 1996).
\190\ Sokaogon Chippewa Community, et al. v. Bruce C. Babbitt, et
al., 929 F. Supp. 1165, 1183 (W.D. Wisc. 1996).
---------------------------------------------------------------------------
The Majority Report mischaracterizes the testimony
of Paul Eckstein. In its Report, the Majority states that Paul
Eckstein testified that Secretary Babbitt ``made comments
suggesting that Interior had come under political pressure to
deny the application.'' In fact, Eckstein testified Secretary
Babbitt denied his request for a delay of the issuance of the
decision on the grounds that ``Harold Ickes had directed him to
issue the decision that day.'' (Ickes was then Deputy Chief of
Staff at the White House.) In his deposition and in his
testimony to the Committee, Eckstein was clear that he
understood the comment that he ascribed to Babbitt to relate
only to the timing, not the substance, of Interior's decision.
Indeed, Eckstein agreed that he had ``no basis'' to believe
that anyone from the White House had ``directed the substance
of the decision denying the application.'' 191 The
Majority Report unfairly draws inferences from Eckstein's
testimony without ever acknowledging that Eckstein himself did
not draw those same inferences from the remarks he ascribed to
Babbitt.
---------------------------------------------------------------------------
\191\ Paul Eckstein Deposition, 9/30/97, pp. 90-91.
---------------------------------------------------------------------------
Response to Majority chapter 24: ``The Cheyenne Arapaho Tribes: The
Quest for the Fort Reno Lands''
This Majority chapter characterizes the decision by the
Cheyenne-Arapaho Tribes to contribute to the DNC as a
``sordid'' chapter in the DNC's 1996 fundraising efforts, and a
``cynical political exploitation.'' According to the Majority:
Democratic fund-raisers led the tribes, who were
politically naive, to believe that making a large
contribution would secure them the long-sought Fort
Reno lands. The tribes made contributions to the DNC,
received encouragement about their land claim from many
quarters, including the President himself, but
ultimately received nothing. The tribes then fell into
the hands of a series of Democratic operators, who
attempted to pick their pockets for legal fees, land
development fees, and additional contributions.
The Majority's conclusions are based on a series of misleading
mischaracterizations, misstatements of facts, and unwarranted
inferences.
The Majority makes misstatements of fact and
creates misleading impressions in its characterization of the
source of the money used by the tribes to contribute to the
DNC. While it correctly states that the money was derived from
the operation of a bingo hall, it incorrectly describes the
role of the tribes with respect to the hall. The Majority
states, ``Although the hall was not profitable--it has incurred
millions in losses since opening--the C/A receive a monthly
$5,000 payment from the entity that manages the bingo hall on
their behalf.'' This statement leaves two false impressions:
(1) that the tribes had contracted out to an outside entity to
manage the bingo hall for them, and (2) that the tribes were
losing millions of dollars as a result of the bingo hall
operations. In fact, the tribes did not hold the gambling
license for the bingo hall. They merely managed the hall for
the licensee, Southwest Casino and Hotel Corporation, and
received a $5,000 monthly payment for this service. Any losses
which might have resulted from the bingo hall operations would
have been incurred by Southwest Casino, not by the Tribes. The
money which the Tribes derived from the bingo hall operation
was thus money which came to them free and clear and not as the
result of a money-losing tribal business venture.
The Majority Report states, ``[W]hile the account from
which the money is drawn does not appear to be a specially-
earmarked welfare fund, it is frequently used to pay for such
things as funeral costs, heating bills, and general assistance
for needy tribal members.'' While that may be the case today,
that was not the case at the time the tribes made the decision
to contribute to the DNC. The Majority ignores the fact that
the chairman and secretary of the tribes' business committee,
as well as the chairman of its business development
corporation, all denied that the tribes had a welfare fund at
the time they made their contribution.192 The
Majority also ignores the fact that Tribes' attorney had
informed the Committee staff that the money from the bingo hall
operations had been placed into certificates of deposit and had
not been used previously for any other purposes.193
---------------------------------------------------------------------------
\192\ Staff interview with Charles Surveyor, 8/22/97; Staff
interview Tyler Todd, 8/21/97. See also, Daily Oklahoman, 3/11/97.
\193\ Staff interview with Barry Coburn, 9/16/97.
---------------------------------------------------------------------------
The Majority falsely states that Democratic fund-
raisers took advantage of the Tribes' political naivete,
leading them to believe that making large contributions would
secure them the long-sought Fort Reno Lands. Not only is this
statement incorrect, but the basic premise upon which it
rests--that the tribes were politically naive--is inaccurate.
By the time the Cheyenne-Arapaho made their decision to
contribute to the DNC in 1996, they were politically active
tribes which had been lobbying at the local, state, and
national levels for years. Their representatives had made
numerous trips to Washington to meet with members of Congress
and officials from the Departments of Interior, Agriculture,
and Justice. They had hired Patton, Boggs & Blow, an
influential Washington lobbying firm, to argue their case. They
had held protest rallies and had spent over $100,000 on
political advertising targeting politicians they saw as opposed
to their interests. Their decision to contribute to the DNC was
a calculated decision to take their political involvement to
another level, not the result of political naivete.
The Majority's contention that someone at the DNC promised
the tribes the return of their lands in exchange for a large
contribution is unsupported by any facts. The tribes made their
decision to contribute before they had even spoken to anyone at
the DNC.194 The Majority cites no direct evidence to
show that Jason McIntosh, Terry McAuliffe, or anyone associated
with the DNC or the Clinton/Gore campaign ever promised the
tribes the return of the Fort Reno lands in exchange for their
contribution. Furthermore, the Majority ignores the unequivocal
statement of Tyler Todd, the chairman of the tribes' business
development corporation, who said, ``We didn't ask for anything
and we weren't promised anything.'' 195
---------------------------------------------------------------------------
\194\ The tribes discussed the idea of contributing to the DNC in
meetings of their business committee on February 12, 1996, and April
30, 1996. Staff interview with Tyler Todd, 8/21/97 and Staff interview
with Barry Coburn, 9/16/97. They informed Michael Turpen, whom they had
hired as a lobbyist, of their decision in May 1996, whereupon Turpen
put the tribes in touch with Jason McIntosh of the DNC. Staff interview
of Barry Coburn, 9/21/97.
\195\ Daily Oklahoman, 3/11/97.
---------------------------------------------------------------------------
The Majority's approach to this issue is curious. The
Majority seems to imply that the tribes were somehow taken
advantage of because they received no direct, tangible policy
benefit from their contribution. At the outset of the chapter
on the tribes, the Majority states, ``The tribes made
contributions to the DNC, received encouragement about their
land claim from many quarters, including the President himself,
but ultimately received nothing.'' The chapter then concludes
by stating, ``They [the tribes] have nothing to show for their
$107,000 in contributions, except memories of a Presidential
luncheon and the hollow echoes of ``encouragement'' to
contribute given them along the way.'' Just what the Majority
believes the tribes should have ``received'' or should ``have
to show'' for their contribution is not clear. Had the tribes
received some direct policy benefit in exchange for their
contribution, would that not have amounted to an illegal quid
pro quo? The fact that the tribes received nothing for their
contribution is therefore not an indication that they were
taken advantage of, but rather an indication that their
dealings with the DNC and the Administration were wholly legal
and appropriate.
The Majority falsely states that the tribes fell
into the hands of a series of Democratic operators, who
attempted to pick their pockets for legal fees, land
development fees, and additional contributions. The Majority
castigates Nathan Landow and Peter Knight for their attempts to
negotiate a contract with the tribes prior to agreeing to
undertake work on their behalf. It should be noted that it was
the tribes who approached Landow and Knight for their services,
not vice-versa. From the beginning of their dealings with the
tribes, both Landow and Knight's firm were clear as to their
fees and the need for a written contract. Their actions in this
regard were nothing more than standard business practices. The
Majority presents no evidence either that the proposed contract
terms were onerous or that the amount of the fees was excessive
in comparison to similar arrangements. Indeed, both Landow and
Knight's firm were aware that their contracts would require the
approval of the Bureau of Indian Affairs, and they drafted the
contracts to conform to the requirements of the Bureau of
Indian Affairs.
It appears that the Majority's main reason for casting
Landow and Knight in a negative light is the fact that they
were ``Democratic operators.'' While it is true than Landow and
Knight had ties to the DNC and the Clinton/Gore campaign, their
dealings with the tribes had nothing to do with those entities.
Indeed, the Majority presents no evidence that Landow or Knight
at any time in their dealings with the tribes acted at the
behest of, on behalf of, or even with the knowledge of the DNC
or the Clinton campaign. The opprobrium which the Majority has
cast upon these individuals by comparing them to pickpockets is
unwarranted and unworthy of this Committee.
Response to Majority chapter 25: The Offer of R. Warren Meddoff
In this chapter, the Majority discusses Florida businessman
Warren Meddoff who, shortly before the 1996 election,
approached President Clinton at a Florida fundraiser concerning
a possible $5 million donation to the President's campaign. The
Majority concludes that White House Deputy Chief of Staff
Harold Ickes's conduct in faxing Meddoff a memorandum listing
several possible tax-exempt organizations to receive the
contribution ``was an attempt to circumvent both the federal
general election contribution prohibition and spending limits
imposed on campaigns receiving public financing.'' At one
point, the Majority states that Ickes subsequently told Meddoff
to ``shred'' this memorandum, but later backs away from this
assertion and reaches no conclusion as to whether Ickes made
this statement. Nevertheless, the Majority insinuates that
Ickes's conduct amounted to an obstruction of justice.
The Majority's conclusions are based on the testimony of a
witness who lacks credibility and are also contrary to any
reading of the law.
The Majority's allegations of circumvention of
campaign finance laws and improper coordination concerning
Harold Ickes are contrary to the Majority's own reading of the
law. The Minority disagrees with the Majority's contention that
Ickes attempted to circumvent campaign finance laws. The
Minority found that Ickes would have been well-advised to
refrain from providing the information contained in the fax to
a potential contributor, in order to avoid any appearance of
improper coordination. Nevertheless, the simple fact that Ickes
identified nonprofit groups in response to a desire by a
potential contributor to make a tax-deductible contribution
does not establish that improper coordination occurred. As the
Majority has recognized in its Report, current law does not
prohibit a federal government employee or party official from
directing contributions to tax-exempt
organizations.196 And as the Majority has also
recognized, the Committee did not determine whether nonprofit
organizations Vote Now '96, the National Coalition of Black
Voter Participation, and Defeat 209 communicated with Clinton/
Gore campaign officials about the steering of donors to these
entities or whether these organizations knew that Ickes was
referring donors to them for the purpose of advancing the
President's re-election. If such communications had occurred,
any contributions might be considered illegal. Moreover, the
Republican National Committee (``RNC'') routinely engaged in
far more troubling activity than this. As admitted by the
Majority in its Report (and as discussed more throughly in the
Minority Report), the RNC ``routinely supported nonprofit
groups that it considered sympathetic to its cause. This
support principally took the form of financial contributions
directly from the RNC or from funds raised by RNC officials.''
197 The Majority concludes, however, that there was
nothing illegal or improper about these activities. To draw
such a conclusion, while at the same time concluding that
Ickes's conduct was inappropriate, is disingenuous at best.
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\196\ The Majority asserts that Congress ``would do well to examine
whether it should continue to be legal for campaigns to refer donors to
nonprofit entities that, for all intents and purposes, will further the
campaign's election. . . .'' Majority Report Chapter 25.
\197\ Majority Report Chapter 28; see Minority Report Chapters 10
and 11-13. These nonprofit groups included Americans for Tax Reform and
Coalition for Our Children's Future.
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The Majority's discussion of Meddoff's allegations
omits critical evidence. As discussed more fully in Minority
Report Chapter 17, the Minority found that the evidence before
the Committee raised grave doubts about Meddoff's credibility
given the questionable nature of his business dealings and
associates, his apparent personal agenda in appearing before
the Committee, and his apparent attempt at bribery in
connection with a previous proposed contribution. Meddoff's
testimony that Ickes told him to shred the memorandum,
considered in this context, lacks credibility.
The Majority claims that Ickes potentially
violated the law by his use of White House staff and equipment
to send the fax to Meddoff when, in fact, the evidence on this
point is not clear. In a footnote, the Majority states, ``If
Ickes solicited Meddoff for contributions, it would appear that
he violated criminal provisions of the Hatch Act, specifically
5 U.S.C. Sec. 7323(b) which prohibits a federal employee from
soliciting political contributions from any location at any
time.'' (Majority Report Chapter 25, n.54) Although this was
not a ``solicitation'' or a ``political contribution,'' the
Majority seems to suggest that the fax was nonetheless
improper. The Minority disagrees with this suggestion, because,
as the Minority points out in Chapter 24 of its Report, the
White House Office of Political Affairs is permitted to engage
in certain types of political activity. That office maintains a
separate fax machine for its political work.198
---------------------------------------------------------------------------
\198\ Jennifer O'Connor deposition, 10/6/97, pp. 149-50.
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Response to majority chapter 26: ``White House, DNC and Clinton-Gore
campaign fundraising efforts involving the International
Brotherhood of Teamsters''
In this chapter, the Majority makes serious allegations
regarding the Teamsters' activities during the 1996 election
cycle. Specifically, the Majority alleges that the Committee's
investigative efforts into relevant activities of the Teamsters
were substantially limited by several factors, including the
refusal by subpoenaed entities to produce documents,
individuals' assertions of their Fifth Amendment rights in
refusing to testify, witnesses' providing ``inaccurate or
misleading testimony,'' and the Committee's agreement to limit
the scope of the investigation because of the Southern District
of New York U.S. Attorney's investigation. The Majority alleges
that Harold Ickes and other Administration officials, in
possible violation of federal law, provided assistance to the
Teamsters on policy matters ``with the intention of enticing''
the Teamsters to participate in Democratic campaigns and
causes. The Majority also alleges that DNC officials
participated in a contribution swap scheme in which they
solicited funds for Ron Carey's reelection campaign of Ron
Carey, who was then president of the Teamsters Union.
The Majority's analysis is based on misstatements of facts
and its conclusions are unsupported by the evidence.
In its Report, the Majority perpetuates its
admittedly inaccurate assertion that the President was involved
in or had knowledge of Martin Davis's improper activities. At
the October 8, 1997 hearing, Chairman Thompson falsely implied
that the President was involved with the Teamsters swap
proposal. The Chairman stated:
The concern is that, according to the Southern
District of New York, you have a conspiracy in May and
June of 1996 for this contribution swap, the Democratic
National Committee and the Teamsters Union. The people
involved in that met with the President on June 17.
Then four days later, the decision was made to
implement at least part of the plan, apparently, by
sending $236,000 to state Democratic parties. [Emphasis
added.] 199
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\199\ Chairman Thompson, 10/8/97 Hrg., pp. 25-26.
During later testimony, however, it was established that
the Chairman was incorrect when he suggested that there was a
private meeting with the President at which the Teamsters swap
proposal was discussed. The evidence presented at the hearing
established that the allegedly ``private meeting'' between the
President and the Teamsters consultants who later pleaded
guilty to fraudulent conduct was actually a luncheon that was
attended by numerous people.200 After receiving the
evidence, the Chairman acknowledged that there was no private
meeting and that all of the lunch attendees lunch entered the
White House at approximately the same time.201
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\200\ 10/8/97 Hrg., pp. 38-39; Exhibit 2396.
\201\ Chairman Thompson, 10/8/97 Hrg., pp. 166-67.
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Astonishingly, the Majority repeats these same false
allegations against the President in its Report, stating:
``Because the Committee has not been unable to speak with
Davis, it cannot determine whether Davis ever discussed
Teamster fundraising or Carey's campaign with the President.''
The Majority's use of random speculation and discredited
evidence to make allegations against the President is both
reckless and unworthy of a Senate Committee.
The Majority wrongly charges that the Committee's
investigation of possible connections between the 1996 election
of officers for the International Brotherhood of Teamsters
(``IBT'') and the 1996 federal elections was ``substantially
limited'' because the AFL-CIO did not cooperate with the
Committee's investigation. The Majority claims the AFL-CIO
``[r]efused to produce documents reflecting dealings with the
White House, DNC and Clinton-Gore campaigns'' and ``[r]efused
to produce relevant materials from the files of Political
Director Steven Rosenthal, Secretary-Treasurer Richard Trumka,
President John Sweeney, and other individuals involved in AFL-
CIO campaign-related activities.'' The Majority's claim is
wrong, and it is misleading. As is plain from its timing--May
1997--and content, the Committee's document subpoena to the
AFL-CIO was not related to allegations about the Carey
campaign--allegations that in fact surfaced long after the
document subpoena to the AFL-CIO was issued by the Committee.
The Committee's subpoena issued to the AFL-CIO covered the
entire range of the AFL-CIO's involvement in electoral and
legislative politics; it did not target matters related to the
Teamsters or the Carey campaign. Further, the ``swap schemes''
referred to by the Majority were not revealed until long after
May 23, the date the Committee issued the subpoena to the AFL-
CIO. The circumstances of the AFL-CIO's objections addressed to
the document subpoena are described in the Minority's response
to Majority Chapter 23 and are entirely unrelated to
allegations of wrongdoing in the Teamsters election.
The Majority Report falsely states the AFL-CIO
Secretary-Treasurer Richard Trumka ``refused to comply'' with a
deposition subpoena issued by the Committee. Again, the
Majority's statements are misleading. As explained in the
Minority's response to Majority Chapter 27, Trumka did not
``refus[e] to comply'' with the Committee's deposition
subpoena. Counsel for the AFL-CIO, after being told by the
Majority Chief Counsel on Thursday, September 18, 1997, that
there would be no further depositions, received three faxed
deposition subpoenas on the evening of Friday, September 19.
One of the depositions requested was Trumka's and it was
scheduled for 9:00 on the very next Monday, September 22--a day
when Majority counsel knew the witnesses in question would be
out of town at the AFL-CIO Convention. Counsel for the AFL-CIO
wrote to the Committee explaining why Trumka and other
witnesses could not appear, but did not refuse to produce the
witnesses on another date.202
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\202\ See Letter from Robert M. Weinberg and Robert F. Muse to
Michael J. Madigan, Chief Counsel, and Philip Perry, Majority Counsel,
Sept. 22, 1997.
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The Majority incorrectly claims that its
investigation of the ``contribution swap'' allegation was
limited. The Majority's investigation was not limited. As the
Majority itself acknowledges it conducted 15 depositions and
``dozens of interviews relating to [the] allegations'' involved
in the contribution swap scheme. The Majority also conducted a
day of hearings regarding these allegations. Moreover, contrary
to the Majority's claim, thousands of pages of documents
related to the Teamsters issues that the Majority was
investigating were produced by the Teamsters, the DNC, the
White House, Vote Now '96, and the law firm that represented
Judith Vazquez. Similarly, contrary to the Majority's
assertion, no witness asserted his or her Fifth Amendment
privilege and refused to appear for a deposition or hearing
relating to the Teamsters issues. Moreover, as detailed in the
Minority Chapter 18, on the Teamsters allegations and as more
thoroughly discussed below, the Majority's claim that witnesses
provided ``inaccurate or misleading'' testimony is not
supported. Finally, while the U.S. Attorney's office did
request that the Committee not subpoena several witnesses, most
of these witnesses have given testimony or statements that are
available to the Committee (and, indeed, these materials are
cited in both the Majority and Minority Reports), and this
``limitation'' did not impede the Majority's investigation.
The Majority claims without sufficient evidence
that there is a suggestion that the Administration took steps
to improperly ``benefit the Teamsters'' in connection with the
Diamond Walnut strike. While it would not have been illegal or
inappropriate for the Administration to get involved in the
Diamond Walnut strike, there is no evidence that
theAdministration in fact took steps that benefitted the Teamsters with
respect to this strike. To the contrary, although the Majority Report
omits mention of this fact, the Diamond Walnut strike is still
ongoing--no Administration action known to the Minority assisted the
Teamsters with the resolution of their dispute with Diamond Walnut.
The Majority presents a slanted version of the
facts surrounding the ``contribution swap'' scheme. The
Majority falsely implies that the idea for the so-called
``contribution swap'' scheme originated with the DNC which was
concerned because the Teamsters were not ``participating in
federal electoral politics at the same extraordinary level as
it had in the 1992 campaign.'' The Report states, after
discussing this purported decrease in political participation,
``In May or June 1996, a plan for a `contribution-swap scheme'
between the DNC and the Teamsters was conceived. It was
relatively simple: the DNC agreed to find a $100,000 donor for
Ron Carey's campaign for reelection as Teamsters president; in
exchange, the Teamsters' PAC director, Bill Hamilton, would
steer approximately $1 million to state Democratic parties.''
As the Majority well knows based on the evidence before the
Committee, the idea for the scheme was entirely that of Martin
Davis, Ron Carey's election campaign consultant, and it was
Davis who contacted Terry McAuliffe. The Majority's implication
that the DNC broached the subject with the Teamsters as part of
the DNC's plan to raise money from the Teamsters is not based
on the evidence.
Throughout the Majority Report, the Majority also presents
a slanted version of the so-called scheme by ignoring key
deposition testimony from credible witnesses regarding the
scheme. For example, its chapter does not contain a single
citation to the deposition of Laura Hartigan, whose testimony
confirmed that of DNC Finance Director Richard Sullivan. She
stated that it was never her understanding that Davis was
suggesting some sort of quid pro quo or a nexus between raising
money for Carey and raising funds for the DNC.203
---------------------------------------------------------------------------
\203\ Laura Hartigan deposition, 9/16/97, pp. 24, 20.
---------------------------------------------------------------------------
The Majority fails to prove allegations that
testimony by Democratic witnesses was false or misleading. As
discussed more thoroughly in Minority Report Chapter 18, the
Minority disagrees with the Majority's contention that Richard
Sullivan provided misleading and inaccurate testimony to the
Committee. Sullivan was forthcoming to the Committee about the
relevant circumstances examined by the Committee surrounding
Judith Vazquez's potential contribution. The Minority also
disagrees with the claim that White House Deputy Chief of Staff
Harold Ickes was not truthful to the Committee. Ickes testified
that he ``discussed Diamond Walnut with Jennifer'' O'Connor,
his assistant,204 and the Majority failed to ask him
about the substance of those conversations.205 The
Majority then claims that Ickes was not forthcoming based on
O'Connor's description of that conversation--her testimony that
she and Ickes discussed whether Mickey Kantor contacted Diamond
Walnut. Moreover, as Ickes testified, the Administration did
not ``do [anything] regarding the Diamond Walnut strike.''
206 The Administration did not intervene in this
strike, and the strike is still underway, indicating that the
Teamsters were not benefitted by any Administration action
relating to this strike.
---------------------------------------------------------------------------
\204\ Harold Ickes deposition, 9/22/97, p. 133.
\205\ The issue of Administration policy with regard to Diamond
Walnut was not fully explored during Ickes's deposition due, in part,
to objections properly posed by Ickes's attorneys on the proper scope
of the deposition.
\206\ Harold Ickes deposition, 9/22/97, p. 141.
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Response to majority report chapter 27: ``Compliance by Non-Profit
Groups with Committee Subpoenas''
The Majority criticizes a number of tax-exempt groups,
ranging from the Christian Coalition to the AFL-CIO, for
refusing to comply with Committee subpoenas. It alleges that
this pattern of noncompliance began in August 1997, when the
AFL-CIO announced that it would not comply with a document
subpoena. The Majority also contends that the subpoenas issued
by the Committee to these groups could not have been enforced
because the Minority would have blocked enforcement efforts and
because the Committee's mandate expired on December 31, 1997.
Finally, the Majority complains that because of the
noncompliance of subpoenaed groups, it was ``unable to draw any
meaningful conclusions about the activities of nonprofit groups
during the 1996 elections.''
The Majority wrongly accuses the AFL-CIO of
``deliberately adopt[ing] an obstructionist strategy designed
to thwart production'' of documents and witnesses to the
Committee in the ``cynical hope of escaping scrutiny . . .'' To
the contrary, the AFL-CIO's responses to the Committee's
document and deposition subpoenas were based on legal positions
that were presented to the Committee in a manner well within
the procedural rules set forth both by this Committee and by
the full Senate. The AFL-CIO was presented with an
extraordinarily broad subpoena, requesting 48 separate
categories of documents that reached deeply into nearly every
aspect of the AFL-CIO's internal organization and structure
and, particularly, into its participation in the political
system. This subpoena differed markedly in its breadth and
scope from any other subpoena issued by the Committee. The AFL-
CIO repeatedly informed the Committee of its concerns regarding
the breadth and scope of these demands 207 and,
after an initial review of some of the millions of documents
demanded by the subpoena, the AFL-CIO provided the Committee
with a lengthy, detailed statement of its legal grounds for
objection. 208
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\207\ See Letter from AFL-CIO counsel, Robert Weinberg and Robert
Muse to Majority and Minority Chief Counsels, June 5, 1997; Letter from
AFL-CIO counsel to Majority and Minority counsel, July 11, 1997; Letter
from AFL-CIO counsel to Majority counsel, Aug. 6, 1997; Letter from
AFL-CIO counsel to Majority and Minority Chief Counsels, 8/20/97.
\208\ See Memorandum of Points and Authorities in Support of the
AFL-CIO's Objections to the Subpoena Duces Tecum, 8/27/97.
---------------------------------------------------------------------------
The Majority falsely asserts that the document
subpoena directed to the AFL-CIO was issued because of ``press
accounts link[ing] the leadership of the AFL-CIO with an
illegal conspiracy to funnel general treasury funds from the
International Brotherhood of Teamsters (``IBT'') to the
reelection campaign of IBT President Ron Carey.'' This claim is
untrue. The document subpoena was issued in May 1997--long
before the IBT election was overturned; there were at that time
no ``press accounts'' linking the AFL-CIO or its leadership to
alleged wrongdoing in the Carey campaign. Further, the subpoena
did not focus on any connection between the AFL-CIO and the
IBT, or make any requests for documents related to the Carey
campaign.
The Majority falsely claims that the AFL-CIO
refused repeated offers extended by the Committee to narrow the
May 23 document subpoena. To the contrary, Majority Counsel
repeatedly informed the AFL-CIO that the subpoena would not be
narrowed. For example, in a June 19, 1997 meeting of counsel
for the AFL-CIO with both Majority and Minority counsel,
Majority counsel explicitly stated that the Committee would not
agree to a narrowing of the subpoena. And in fact, an August 23
letter signed by the Majority Chief Counsel--and incorporated
by the Chairman in his September 3 Ruling and Order--simply set
forth the Majority's demands for an ``immediate production,''
which was clearly labeled as an ``initial production'' sought
by the Majority.209
---------------------------------------------------------------------------
\209\ Letter from Majority Chief Counsel to AFL-CIO counsel, Aug.
25, 1997, at 4 (stating that ``the Committee agrees not to enforce the
following specifications at this time.').
---------------------------------------------------------------------------
The Majority falsely claims that the AFL-CIO
``refused to produce witnesses pursuant to deposition
subpoenas, or to allow the Committee to interview persons
affiliated'' with the AFL-CIO. The record shows that this
characterization is wrong. Deposition subpoenas were sent to a
total of five AFL-CIO officials or consultants. The AFL-CIO did
not refuse to produce any of these witnesses.210
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\210\ As documented in a September 22, 1997 letter to Majority
Chief Counsel from AFL-CIO counsel, subpoenas for three of the AFL-CIO
witnesses (Richard Trumka, Gerald Shea, and Steve Rosenthal) were sent
by Majority counsel by facsimile at 5:35 p.m. on Friday, September 19,
1997, to the offices of AFL-CIO counsel. The subpoenas demanded
appearances at 9:00 a.m on Monday, September 22, of the AFL-CIO's
Secretary-Treasurer, Political Director, and Executive Assistant to the
President. No notice preceded these subpoenas and, indeed, they arrived
approximately 24 hours after the Majority Chief Counsel had assured the
AFL-CIO that the Committee would not be taking any depositions of AFL-
CIO witnesses. The Majority had been informed that all three
individuals were in Pittsburgh for the AFL-CIO's biannual convention,
which was scheduled to continue through the week of September 22.
Counsel for the AFL-CIO submitted a letter to the Committee on the
morning of September 22 explaining why the three witnesses would not be
appearing on that day. That letter did not state that the witnesses
would not appear on another date. The Majority made no effort at any
time to secure the presence of these witnesses on another date. With
regard to the deposition subpoenas issued to two AFL-CIO consultants,
the majority's claims of ``defiance'' are similarly false. One of these
witnesses--Geoffrey Garin--appeared at his deposition and testified
fully in response to questions by Committee counsel. The other witness,
Ray Abernathy, was subpoenaed for a deposition to take place on
September 20, but prior to his appearance, counsel for the AFL-CIO was
informed by Majority staff that it would not be necessary for Abernathy
to appear.
---------------------------------------------------------------------------
The Majority is wrong in its claim that the
Minority would not have supported contempt actions against all
groups that did not comply with subpoenas. In fact, the record
is clear that on a number of occasions, the Minority asked the
Committee to enforce its subpoenas. The Minority believed that
a refusal to enforce subpoenas not only impeded the Committee's
investigation, but set a terrible precedent. As Senator
Lieberman noted, ``We are the people's representatives. We are
the people's opportunity to find the facts, to search for the
truth, and when the parties that we subpoena are asked for
information, do not cooperate, it is an insult to the Congress,
and it sets a precedent that is not one that we should
accept.'' 211When Chairman Thompson asked Senator
Glenn on October 8 if he would vote to hold liberal-leaning, as
well as conservative-leaning, groups, in contempt, Senator
Glenn responded:
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\211\ Senator Lieberman, 10/7/97 Hrg. p. 41.
I would probably vote for contempt for the whole, for
everybody that has denied our subpoenas, for everybody
who has said they will not appear and has stiffed us. I
think the authority of this Committee, the jurisdiction
of the Committee, the jurisdiction of the United States
Senate to enforce subpoenas is what is at issue here. .
. . Let us support all of [the Committee's
subpoenas].212
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\212\ Senator Glenn, 10/8/97 Hrg. pp. 73-74.
Thus, months before the Committee's mandate expired, the
Minority expressed its willingness to support contempt actions
against noncompliant groups.
The Majority Report fails to acknowledge that
defiance of the Committee's authority began when the National
Policy Forum ignored an order by Chairman Thompson and refused
to produce documents. On April 9, 1997, the Committee issued a
subpoena calling on NPF to produce responsive documents by
April 30. NPF provided a limited number of documents on June 6
and June 30, but stated that these documents were not
responsive andclaimed that the subpoena was invalid. On July 3,
Chairman Thompson issued an order that stated, ``The National Policy
Forum is ORDERED and DIRECTED to produce all documents in its files
that are responsive to the NPF subpoena . . . by 9 a.m. on Monday, July
14. . . .'' 213 NPF flatly refused to obey this order. The
Committee failed to initiate contempt proceedings. A month later, a
number of other groups, including the Trail Lawyers, the Christian
Coalition, the AFL-CIO, and the National Right to Life Committee,
announced that they would challenge the Committee subpoenas.
---------------------------------------------------------------------------
\213\ Order to National Policy Forum from Chairman Thompson to
produce all documents responsive to the National Policy Forum subpoena,
7/3/97.
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The Majority Report fails to acknowledge that
defiance of the Committee's authority continued when
individuals associated with Triad Management refused to appear
for depositions or answer questions pursuant to Committee
subpoena. On September 8, 1997, counsel for employees, officers
and directors of Triad, Citizens for Reform, and Citizens for
the Republic informed the Committee that they would not appear
for deposition pursuant to subpoena. While three individuals
did later appear, they refused to answer any questions. This
was the first instance of individuals refusing to comply with
subpoenas.214
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\214\ In September, the Majority subpoenaed three individuals
associated with the AFL-CIO. The Committee issued these subpoenas after
it had announced its intention to suspend investigative hearings and
proceed with hearings on campaign-finance reform. Even though the
Committee knew that the subpoenaed individuals had previous time
commitments, it ordered them to appear for depositions only three days
after the subpoenas were issued. The individuals informed the Committee
that they would not appear at the scheduled time, but the Committee
made no attempt to reschedule their depositions.
---------------------------------------------------------------------------
The Majority's claim that noncompliance by
nonprofit groups prevented it from drawing ``any meaningful
conclusions about the activities of nonprofit groups during the
1996 elections'' is disingenuous. The Majority has used the
noncompliance of Republican nonprofit groups as an excuse for
not examining the activities of these organizations. Although
the recalcitrance of these groups did hamper the Committee's
investigation, as Part 3 of the Minority Report shows, there is
ample documentary evidence to conclude that the Republican
Party improperly used tax-exempt groups, such as Americans for
Tax Reform, the National Right to Life Committee, the Christian
Coalition, and Coalition for Our Children's Future, for
political purposes. And it was the Majority's own failure to
seek enforcement of the subpoena that created that problem the
Majority now relies on for an excuse.
Response to majority chapter 28: ``The Role of Nonprofit Groups''
The Majority and the Minority agree that nonprofit
organizations played a major role in the 1996 campaign. These
groups spent tens of millions of dollars distributing ``voter
guides'' aimed at helping specific candidates win election or
broadcasting purported ``issue advocacy'' ads that were clearly
designed to help specific candidates. The law governing issue
advocacy is extremely liberal: Advertisements that avoid using
certain language to ``expressly advocate'' the election or
defeat of specific candidates is generally deemed by the courts
to fall into the ``issue advocacy'' category. As a result, the
funds used to pay for the ads are not treated as campaign
contributions. Thus, donors who want to evade campaign finance
restrictions have been able to assist candidates by donating
money to nonprofit groups that run political attack ads under
the guise of issue advocacy.
In discussing the role of nonprofit groups, the Majority
correctly states that there was ``an unprecedented level of
political activity by nonprofit groups'' during the 1996
election. The Majority is also correct in stating that several
nonprofit groups failed to cooperate with the Committee's
investigation. But the Majority's chapter on this subject is
seriously flawed on several grounds.
Overview
The Majority mischaracterizes the degree to which
different nonprofit groups cooperated with the investigation.
Most notably, the Majority focuses on AFL-CIO as being
extremely recalcitrant while downplaying or ignoring similar
examples of noncooperation by several conservative groups. It
also states that the Committee was unable to question several
former officials of the Republican National Committee (``RNC'),
without noting the reason: The Minority's efforts to serve at
least one of the individuals with knowledge of the RNC's
interaction with outside groups was impeded by the
Majority.215
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\215\ In early August 1997, Curt Anderson, through his attorney,
indicated he would voluntarily appear for a deposition. Subsequently,
he changed his mind, and at the request of the Minority, the Majority
issued a Subpoena with a September 18 return date. Anderson could not
be located immediately and the subpoena was served on September 19, one
day after the return date. Anderson's attorney claimed the subpoena was
invalid, and the Majority refused the Minority's request to issue a
second subpoena to Anderson.
---------------------------------------------------------------------------
The Majority asserts that the Committee faced an
``inability'' to depose key personnel of the RNC, Americans for
Tax Reform, Triad and others and states that it is unable to
form conclusions as the result of such non-cooperation. In
fact, the Committee could easily have found these individuals
in contempt of the Committee and enforced the subpoenas. The
Committee could also have held public hearings on these groups.
The Majority applies a different standard to the
AFL-CIO, which ran issue ads aimed at benefiting the Democrats,
than it applies to Republican groups. For example, the Majority
discusses allegations that the AFL-CIO coordinated with the
Democratic National Committee and the Clinton re-election
campaign, and yet it minimizes--or simply ignores--disturbing
evidence regarding the Republican National Committee's
coordination with pro- Republican groups. As noted below, the
RNC not only engaged in extensive coordination with a long list
of nonprofit organizations, it established nonprofit front
groups and it provided millions of dollars in financial help
(directly or through fundraising assistance) to several other
tax-exempt groups.
The AFL-CIO
In asserting that the AFL-CIO engaged in illegal
coordination with the Clinton campaign, the Majority applies a
double standard. Relying upon a legal analysis for coordination
of an independent expenditure containing express advocacy, the
Majority concludes, contrary to the facts, that the AFL-CIO
engaged in illegal coordination while Triad Management did not.
The Majority's claims that a nonprofit group violates the law
regarding coordination with campaigns only when the group
spends money ``at the request of the candidate . . . or based
upon information obtained from the candidate.'' The Majority
concludes that the AFL-CIO illegally coordinated with he
Clinton campaign although they fail to offer evidence that any
candidate, campaign staff, or White House officials provided
information or direction to the AFL-CIO.
The Majority improperly assumes that all
communications between the AFL-CIO and the White House were for
the purpose of electoral politics. As Garin and Ickes
testified, meetings between the AFL-CIO and White House
officials were principally related to then pending legislative
issues, and the AFL-CIO often shared information with the White
House to persuade White House officials to support the AFL-CIO
position with respect to those issues.216
---------------------------------------------------------------------------
\216\ Geoffrey Garin deposition, 9/5/97, p. 41.
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The Majority inaccurately asserts that the AFL-CIO
and staff of the Clinton campaign improperly coordinated timing
and strategy of balanced budget advertising in December 1995.
In fact, the testimony is consistent that both White House
staff and Clinton campaign officials believed that the only
advertisements viewed were advertisements already on the air,
and that they took steps to ensure they would not coordinate
content, strategy or location of advertising in advance. The
Majority report falsely states that both Harold Ickes and Dick
Morris testified that organized labor and the DNC previewed
each others advertising. In fact, Morris testified organized
labor showed ads they ``either had run or were planning to run,
I was never quite clear what it was. And we showed them ads
that had already run.'' 217Ickes testified ``I think
that these ads were up and running and that the AFL-CIO just
wanted to show us what they were running,'' and Doug Sosnick
testified that he had no specific recollection of the ads but
recalled discussing with Ickes that White House staff ``would
not discuss with labor either the content or placement of their
ads prior to them doing it,'' and that White House staff
likewise would not discuss what the DNC would air or where it
would air.218 Thus, there is no evidence that DNC or
labor advertisements were ever previewed, and there is no
evidence that there was ever any advance discussion of content
or placement of such advertising.
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\217\ Dick Morris deposition, 8/20/97, p. 216-17.
\218\ Harold Ickes deposition, 9/22/97, p. 193; Doug Sosnick
deposition, 9/12/97, pp. 148-49.
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The Majority improperly relies on testimony of
political consultant Dick Morris, that an official of organized
labor, who he cannot recall, suggested that 1995 balanced
budget advertising be coordinated. In fact, Morris also
testified that there was never any agreement to coordinate and
no coordination took place. Morris testified that the
suggestion of coordination was immediately rejected and at no
time during the campaign were the ads coordinated in any
way.219 Several other individuals including then
Chief of Staff Leon Panetta and George Stephanopoulos, who were
also present had no recollection of any suggestion of
coordination.220 While Ickes had no specific
recollection of such a suggestion, he testified that there
``could well have been'' a suggestion of coordination, as there
were many suggestions made at meetings.221 However,
Morris, Sosnick, and Ickes testified that no coordination of
advertising schedules actually occurred.222
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\219\ Dick Morris deposition, 8/20/97, p. 217.
\220\ Leon Panetta deposition, 8/29/97, p. 190; George
Stephanopoulos deposition, 9/6/97 p. 98.
\221\ Harold Ickes deposition, 9/22/97, p. 193.
\222\ Harold Ickes deposition, 9/22/97, p. 193, Dick Morris
deposition, 8/20/97, p. 217, Doug Sosnick deposition, 9/12/97, p. 46.
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The Majority details no evidence that the AFL-CIO
coordinated any 1996 issue advertising with any congressional
candidate. AFL-CIO advertising in 1996 contained advertisements
that focused on the records of specific candidates for the
House of Representatives. In the spring of 1995, the AFL-CIO
made a public announcement of its intent to target many
freshman Members of Congress. While the AFL-CIO informed Ickes
of this intent, the information hardly amounts to ``the sneak
preview'' alleged by the Majority. Similarly, the Majority
recites information about a ``draft'' memorandum from Jennifer
O'Connor without mentioning the fact that on the face of the
memorandum it is clear that the memorandum relates to the
``Coordinated Campaign,'' the permissible annual get-out-the-
vote programs undertaken by groups sympathetic to both
political parties.
Triad Management services
The Majority incorrectly states that Triad
Management provides services to conservative contributors in
exchange for a set fee. Evidence received by the Committee
shows that Triad does not charge regular fees, is largely
financed by a single backer andgenerates no profits. See
Minority Report Chapter 12.
The Majority incorrectly states that Citizens for
Reform and Citizens for the Republic Education Fund simply paid
management fees to Triad and aired issue advertising under
Triad's guidance and omits a full description of their
relationship with Triad. Citizens for the Reform and Citizens
for the Republic Education Fund were created and controlled by
Triad. Both organizations existed largely on paper and lacked
offices, staff, and telephones. Moreover, these organizations
undertook no activities apart from those arranged by Triad. See
Minority Chapter 12.
The Majority insists that Triad's pattern of
visiting campaigns, meeting with candidates and campaign staff,
reviewing advertisements, providing advice to candidates and
staff, and gathering information on key issues in the race did
not rise to the level of illegal coordination. The Majority
simultaneously concludes that the AFL-CIO did engage in illegal
coordination based on less compelling, and often undocumented
facts and evidence. The reports of meetings between Triad's
consultants and Republican candidates and campaigns document an
unprecedented level of coordination between allegedly
independent organizations and campaigns. The FEC has repeatedly
enforced violations for activity similar to and less extensive
than Triad's.223 The Majority also employs a double
standard under which it concludes that all AFL-CIO and White
House communications were sufficient to establish coordination,
but Triad and candidate communications were not.224
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\223\ FEC Matter Under Review 3918 Hyatt Legal Services; FEC Matter
Under Review Orton for Congress; FEC Matter Under Review, 3608, Bush-
Quayle '92.
\224\ FEC Matter Under Review 3608, Bush-Quayle, and J. Stanley
Huckaby as treasurer.
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The Majority asserts that Triad did not make an
illegal corporate contribution to the Brownback for Senate
campaign when Triad employee Meredith O'Rourke was sent to the
National Republican Congressional Committee (``NRCC'') to help
Senator Brownback ``dial for dollars.'' In fact, O'Rourke
testified that she went to help Brownback at the instruction of
her superior at Triad, Carolyn Malenick.225 The
Majority relies on press statements of Triad's attorneys rather
than O'Rourke's testimony in claiming that O'Rourke appeared at
the NRCC as a ``volunteer.''
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\225\ Meredith O'Rourke deposition, 9/3/97 pp. 94-95.
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The Majority asserts that there is insufficient
evidence to conclude that employees of Triad engaged in an
illegal scheme to launder contributions through PACs to
Republican candidates. The Majority further offers instances of
overlapping contributions from individuals and PACs to
Democratic candidates as evidence that coincidental
contributions are not necessarily illegal. The Majority ignores
compelling evidence developed by the Committee that Triad
employees personally solicited the names of potential PAC
contributors from candidates, solicited those individuals for
PAC contributions, delivered contributions to the PACs, were in
regular communication with people at each PAC, and delivered
PAC contributions to recipient candidates. The Committee
established that Malenick was involved as an intermediary in
the making of contributions to multiple PACs that all made
contributions to the same candidate within days.226
No similar evidence of earmarking was uncovered in relation to
contributions received by Democratic candidates. See Minority
Report Chapter 12.
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\226\ Minority Report Chapter 12.
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The Majority fails to mention evidence that over
$1 million of Triad's ad campaign was financed by a secret
organization, the Economic Education Trust, that required Triad
use its political consultants, and that also appears to have
funded advertising through other organizations. The Minority
twice requested a Committee subpoena for the financial records
of the Economic Education Trust. No subpoena was ever issued,
virtually ensuring that the identity of the individuals or
corporations who may have influenced the outcome of elections
will remain unknown. See Minority Report Chapter 12.
The Majority asserts that the Minority has
repeatedly leaked documents pertaining to Triad in violation of
the Committee protocol. The Majority specifically relies on a
May 2, 1997 Kansas City Star article detailing suspicious PAC
contributions to the Brownback for Senate campaign. The article
makes no reference to information obtained from the Committee,
is based on information available on the public record, and was
written months before Triad produced records to the Committee.
Further, an October 29, 1997, Wall Street Journal article on
the subject of Triad states: ``Republican investigators said
the Kochs paid Triad a fee, indicating they are a client of the
company, which advises donors on where to contribute.''