[House Report 105-829]
[From the U.S. Government Publishing Office]
Union Calendar No. 471
105th Congress, 2d Session - - - - - - - - House Report 105-829
INVESTIGATION OF POLITICAL FUNDRAISING IMPROPRIETIES AND
POSSIBLE VIOLATIONS OF LAW INTERIM REPORT
----------
SIXTH REPORT
by the
COMMITTEE ON GOVERNMENT
REFORM AND OVERSIGHT
together with
ADDITIONAL AND MINORITY VIEWS
Volume 4 of 4
November 5, 1998.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
INVESTIGATION OF POLITICAL FUNDRAISING IMPROPRIETIES AND POSSIBLE
VIOLATIONS OF LAW--VOLUME 4 OF 4
Union Calendar No. 471
105th Congress, 2d Session - - - - - - - - House Report 105-829
INVESTIGATION OF POLITICAL
FUNDRAISING IMPROPRIETIES AND
POSSIBLE VIOLATIONS OF LAW
INTERIM REPORT
__________
SIXTH REPORT
by the
COMMITTEE ON GOVERNMENT
REFORM AND OVERSIGHT
together with
ADDITIONAL AND MINORITY VIEWS
Volume 4 of 4
November 5, 1998.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York HENRY A. WAXMAN, California
J. DENNIS HASTERT, Illinois TOM LANTOS, California
CONSTANCE A. MORELLA, Maryland ROBERT E. WISE, Jr., West Virginia
CHRISTOPHER SHAYS, Connecticut MAJOR R. OWENS, New York
CHRISTOPHER COX, California EDOLPHUS TOWNS, New York
ILEANA ROS-LEHTINEN, Florida PAUL E. KANJORSKI, Pennsylvania
JOHN M. McHUGH, New York GARY A. CONDIT, California
STEPHEN HORN, California CAROLYN B. MALONEY, New York
JOHN L. MICA, Florida THOMAS M. BARRETT, Wisconsin
THOMAS M. DAVIS, Virginia ELEANOR HOLMES NORTON, Washington,
DAVID M. McINTOSH, Indiana DC
MARK E. SOUDER, Indiana CHAKA FATTAH, Pennsylvania
JOE SCARBOROUGH, Florida ELIJAH E. CUMMINGS, Maryland
JOHN B. SHADEGG, Arizona DENNIS J. KUCINICH, Ohio
STEVEN C. LaTOURETTE, Ohio ROD R. BLAGOJEVICH, Illinois
MARSHALL ``MARK'' SANFORD, South DANNY K. DAVIS, Illinois
Carolina JOHN F. TIERNEY, Massachusetts
JOHN E. SUNUNU, New Hampshire JIM TURNER, Texas
PETE SESSIONS, Texas THOMAS H. ALLEN, Maine
MICHAEL PAPPAS, New Jersey HAROLD E. FORD, Jr., Tennessee
VINCE SNOWBARGER, Kansas ------
BOB BARR, Georgia BERNARD SANDERS, Vermont
DAN MILLER, Florida (Independent)
RON LEWIS, Kentucky
Kevin Binger, Staff Director
Barbara J. Comstock, Chief Counsel
David A. Kass, Deputy Counsel and Parliamentarian
Lisa Smith Arafune, Deputy Chief Clerk
Philip M. Schiliro, Minority Staff Director
-----------
MINORITY STAFF MAJORITY STAFF
Kevin Binger, Staff Director Kristin L. Amerling, Minority
Barbara Jean Comstock, Chief Counsel
Counsel Kenneth M. Ballen, Minority Chief
James C. Wilson, Chief Investigative Counsel
Investigative Counsel Philip S. Barnett, Minority Chief
David A. Kass, Deputy Counsel and Counsel
Parliamentarian Courtney A. Cook, Minority Staff
Michael Bopp, Senior Investigative Assistant
Counsel Sarah Despres, Minority Counsel
J. Timothy Griffin, Senior Jonathan M. Frenkel, Minority
Investigative Counsel Counsel
Kristi L. Remington, Senior Harold W. Gossett, Minority
Investigative Counsel Professional Staff Member
Elliot S. Berke, Investigative Christopher P. Lu, Minority
Counsel Counsel
Robert J. Dold, Investigative Michael J. Raphael, Minority
Counsel Counsel
Jason Hopfer, Investigative Counsel Ellen P. Rayner, Minority Chief
John Irving, Investigative Counsel Clerk
Rae Oliver, Investigative Counsel Jessica R. Robinson, Minority
Jim Schumann, Investigative Counsel Staff Assistant
Michelle E. White, Investigative David Sadkin, Minority Counsel
Counsel Philip M. Schiliro, Minority Staff
Dudley Hodgson, Chief Investigator Director
Milt Copulos, Investigator Andrew H. Su, Minority Research
Kevin Davis, Investigator Assistant
G. Andrew Macklin, Investigator Amy R. Wendt, Minority Staff
John T. Mastranadi, Investigator Assistant
Matt Tallmer, Investigator Barbara A. Wentworth, Minority
Thomas P. Bossert, Assistant to Research Assistant
Chief Counsel Michael T. Yang, Minority Counsel
Jason Foster, Assistant Systems Michael J. Yeager, Minority
Administrator Counsel
Laurel Grover, Staff Assistant
Kenneth Feng, GAO Detailee
Roger Stoltz, GAO Detailee
Richard D. Bennett, Special Counsel
to the Committee
LETTER OF TRANSMITTAL
----------
House of Representatives,
Washington, DC, November 5, 1998.
Hon. Newt Gingrich,
Speaker of the House of Representatives,
Washington, DC.
Dear Mr. Speaker: By direction of the Committee on
Government Reform and Oversight, I submit herewith the
committee's sixth report to the 105th Congress.
Dan Burton,
Chairman.
C O N T E N T S
----------
Page
Preface.......................................................... 1
Chapter I: Introduction.......................................... 5
Chapter II: Unprecedented Obstacles to the Committee's
Investigation.................................................. 47
Chapter III: The Democrats' Failure to Return Illegal Campaign
Contributions.................................................. 149
Chapter IV: Unprecedented Infusion of Foreign Money Into the
American Political System...................................... 1185
Part A: The Riady Family and John Huang: Access and Influence
with the Clinton White House............................... 1185
Part B: Yah Lin ``Charlie'' Trie and His Relationship with
the Clinton Administration................................. 1347
Part C: Johnny Chung: His Unusual Access to the White House
and His Political Donations................................ 1671
Part D: The Sioeng Family's Contributions and Foreign Ties... 2131
Chapter V: The Failure of Government Agencies to Vigorously
Pursue Campaign Violations..................................... 2933
Part A: Jorge Castro's Illegal Campaign Contributions, and
Why They Were Never Prosecuted............................. 2933
Part B: FEC Enforcement Practices and the Case Against
Foreign National Thomas Kramer: Did Prominent DNC
Fundraisers Receive Special Treatment?..................... 2983
Chapter VI: The Hudson Casino Rejection.......................... 3111
Chapter VII: Procedural Background of the Campaign Finance
Investigation.................................................. 3863
VIEWS
Additional views of Hon. Dan Burton.............................. 3881
Additional views of Hon. Pete Sessions........................... 3920
Minority views of Hon. Henry A. Waxman, Hon. Tom Lantos, Hon.
Robert E. Wise, Jr., Hon. Major R. Owens, Hon. Edolphus Towns,
Hon. Paul E. Kanjorski, Hon. Gary A. Condit, Hon. Bernard
Sanders, Hon. Carolyn B. Maloney, Hon. Eleanor Holmes Norton,
Hon. Chaka Fattah, Hon. Elijah E. Cummings, Hon. Dennis J.
Kucinich, Hon. Rod R. Blagojevich, Hon. Danny K. Davis, Hon.
Thomas H. Allen, and Hon. Harold E. Ford, Jr................... 3923
Additional views of Hon. Thomas M. Barrett....................... 4878
Union Calendar No. 471
105th Congress Rept. 105-829
HOUSE OF REPRESENTATIVES
2d Session Vol. 4 of 4
_______________________________________________________________________
INVESTIGATION OF POLITICAL FUNDRAISING IMPROPRIETIES AND POSSIBLE
VIOLATIONS OF LAW
______
November 5, 1998.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______________________________________________________________________
Mr. Burton, from the Committee on Government Reform and Oversight,
submitted the following
SIXTH REPORT
together with
ADDITIONAL AND MINORITY VIEWS
On October 8, 1998, the Committee on Government Reform and
Oversight approved and adopted a report entitled,
``Investigation of Political Fundraising Improprieties and
Possible Violations of Law.'' The chairman was directed to
transmit a copy to the Speaker of the House.
MINORITY VIEWS OF HON. HENRY A. WAXMAN, HON. TOM LANTOS, HON. ROBERT E.
WISE, JR., HON. MAJOR R. OWENS, HON. EDOLPHUS TOWNS, HON. PAUL E.
KANJORSKI, HON. GARY A. CONDIT, HON. BERNARD SANDERS, HON. CAROLYN B.
MALONEY, HON. ELEANOR HOLMES NORTON, HON. CHAKA FATTAH, HON. ELIJAH E.
CUMMINGS, HON. DENNIS J. KUCINICH, HON. ROD R. BLAGOJEVICH, HON. DANNY
K. DAVIS, HON. THOMAS H. ALLEN, HON. HAROLD E. FORD, JR.
CONTENTS
INTRODUCTION
I. The Investigation was Characterized by Partisanship, Mishaps, Abuses
of Power, and Waste
A. The Investigation Was Partisan
1. Chairman Burton Promised to Conduct a Fair Investigation
2. Chairman Burton Later Admitted that He Is ``After'' the
President
3. Over Ninety-Nine Percent of Subpoenas and Other Information
Requests Targeted Democrats
4. Republican Campaign Finance Abuses Have Been Routinely
Ignored
a. Republican Favors for the Tobacco Industry
b. Republican Conduit Contributions
c. Republican Fundraising on Federal Property
d. Illegal Foreign Contributions to Republicans
e. The Activities of Triad Management Services
5. The Majority Doctored Evidence and Suppressed Testimony to
Make Democrats Appear Culpable
a. The Webster Hubbell Tapes
b. Other Examples of the Selective Use of Evidence
B. The Investigation Was Plagued by Mishaps
1. Subpoenas Issued to the Wrong Individuals
2. The Committee's ``Stake Out'' of Felix Ma
3. The Committee's Release of the President's Private Fax Number
4. The Committee's Actions in Taiwan
5. Insensitivity to the Concerns of Asian-Americans
6. Republican Acknowledgment of the Committee's Incompetence
C. The Committee Abused Its Powers
1. The Committee Abused the Subpoena Power
2. The Committee Abused the Deposition Power
3. The Committee Abused the Immunity Power
4. The Committee Abused the Contempt Power
5. The Committee Abused the Power to Release Documents
6. The Committee Leaked Confidential Information
7. The Committee Excluded the Minority from Witness Interviews
8. The Committee Violated its Own Budget Rules
D. The Committee Wasted Taxpayer Dollars
1. The Committee Has the Largest Budget of Any Committee in the
History of Congress
2. The Committee Spent Over $7.4 Million on the Campaign Finance
Investigation
3. The Investigation Is the Most Expensive and Least Productive
Congressional Investigation in History
4. The Investigation Squandered Taxpayer Dollars
5. The Investigation Duplicated the Senate Investigation
6. The Investigation Duplicated Other House Investigations
7. The Investigation Imposed Large Costs on Federal Agencies
8. The Total Costs to the Taxpayer from Congressional Campaign
Finance Investigations Exceed $23 Million
9. The Investigation Imposed Large Costs on the DNC and Other
Private Parties
E. The Investigation Was Widely Criticized
1. The Views of Editorial Boards
2. The Views of Columnists and Commentators
II. The Majority Repeatedly Made Sensational Allegations That Were False
or Unsubstantiated
A. John Huang Did Not ``Launder Money'' through David Wang
B. The White House Videotapes Were Not ``Cut Off Intentionally'' or
``Altered''
C. The Hudson Casino Decision Was Not a ``Political Payoff''
D. There Is No Evidence That the President Created a National
Monument in Utah ``in Exchange for Money from Indonesia's Lippo
Group''
E. The Hubbell Tapes Did Not Show a ``Payoff'' to Webster Hubbell
F. The Immunized Witnesses Did Not have ``Direct Knowledge About How
the Chinese Government Made Illegal Campaign Contributions''
G. President Clinton Did Not ``Endorse'' the Candidacy of a Foreign
Leader in Exchange for Campaign Contributions
H. The Committee Failed to Substantiate the Existence of a ``Massive
Scheme'' to Funnel Foreign Contributions into the U.S
I. Other Unsubstantiated Republican Allegations
III. The Majority Report Contains Little New Information
A. Introduction
B. Evaluation of Chapter II of the Majority Report
C. Evaluation of Chapter III of the Majority Report
D. Evaluation of Chapter IV of the Majority Report
1. Allegations Relating to the Riady Family and John Huang
2. Allegations Relating to Charlie Trie
3. Allegations Relating to Johnny Chung
4. Allegations Relating to Ted Sioeng
E. Evaluation of Chapter V of the Majority Report
1. Allegations Relating to Jorge Castro Barredo and Charles
Intriago
2. Allegations Relating to Thomas Kramer and Howard Glicken
F. Evaluation of Chapter VI of the Majority Report
IV. A Review of Questionable Republican Campaign Finance Practices
A. Conduit Contribution Schemes and Republican Campaigns
1. The Prohibition on Conduit Contributions
2. Conduit Contribution Scheme Involving Majority Whip DeLay,
Peter Cloeren, and Brian Babin
3. Conduit Contribution Scheme Involving Thomas Stewart
4. Conduit Contribution Scheme Involving Simon Fireman and Aqua-
Leisure Industries, Inc
5. Conduit Contribution Scheme Involving Empire Sanitary
Landfill
6. Conduit Contribution Scheme Involving DeLuca Liquor & Wine
Ltd
B. Republicans Have Received Foreign Campaign Contributions
1. Foreign Contributions Solicited by Rep. Jay Kim
2. Foreign Contributions Solicited by Haley Barbour
3. Additional Foreign Contributions Solicited by the NPF
4. Contributions to Republicans from Ted Sioeng
a. Ted Sioeng's Relationship with Matt Fong
b. Ted Sioeng's Relationship with Speaker Gingrich
c. Unanswered Questions Regarding Mr. Sioeng's Relationship
with Matt Fong and Speaker Gingrich
5. Other Foreign Contributions to Republicans
6. Contributions to Republicans from U.S. Subsidiaries of
Foreign Companies
C. The Relationship between Access to Republican Leaders and
Campaign Contributions
1. The Sale of Access by Republican Congressional Leaders
2. The Sale of Access by Prior Republican Administrations
3. Contributions That May Have Influenced Policy Decisions
D. Triad Management Services Engaged in Questionable Practices to
Support Republican Candidates
1. Background on Triad
2. Triad's Alleged Illegal Corporate Contributions
3. Triad's Alleged Schemes to Evade Contribution Limits
4. Triad's Possible Improper Coordination on Political
Advertisements
V. The Republican Congress has Blocked Campaign Finance Reform and
Played Politics with the Federal Election Commission
A. The Republican Leadership Defeated Campaign Finance Reform
Legislation
1. The Campaign Finance Reform Legislation
2. Republican Efforts to Thwart Campaign Finance Reform
3. How Committee Members Voted
B. The Republican Leadership Sought to Hamstring the FEC
1. Efforts to Remove the FEC's General Counsel
2. Efforts to Defund the FEC
APPENDIX
Exhibit 1: Correspondence
Exhibit 2: Minority Staff Reports
Exhibit 3: Editorials
Exhibit 4: Columns and Opinions
Exhibit 5: News Articles
Exhibit 6: Cloeren Affidavit
Exhibit 7: Documents Relating to Alleged Obstacles to the Committee's
Investigation
Exhibit 8: Documents Relating to Contributions to the Democratic Party
Exhibit 9: Documents Relating to Charlie Trie
Exhibit 10: Documents Relating to Johnny Chung
Exhibit 11: Documents Relating to Ted Sioeng
Exhibit 12: Documents Relating to the National Policy Forum
Exhibit 13: Documents Relating to the Republican National Committee
INTRODUCTION
Last year, House Speaker Newt Gingrich said that the
Committee's campaign finance investigation ``may be the most
historic investigation in the history of the United States.''
1 The investigation may be historic, but for all the
wrong reasons.
---------------------------------------------------------------------------
\1\ Speaker Ties Cash Scandal to Clinton, Gore, Washington Times
(June 9, 1997).
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As described in detail in Part I of these minority views,
the Committee's campaign finance investigation has been the
most partisan, unfair, and abusive investigation since the
McCarthy hearings in the 1950s. It has also been the most
expensive congressional investigation in history.
Chairman Burton alleged at the outset of the investigation
that ``this thing could end up being bigger than Watergate ever
was'' and that he would prove the existence of a ``massive''
Chinese conspiracy to violate our campaign finance laws. But as
described in Part II, Chairman Burton never substantiated these
and many other well-publicized allegations. Unfortunately, the
pattern of ``accuse first, investigate later'' became a
hallmark of the investigation.
Part III of these views responds to the major findings in
the majority report. The Committee spent over $7 million on the
campaign finance investigation, issued 1,285 subpoenas and
information requests, took 161 depositions, and received 1.5
million pages of documents, but found virtually no new
information.
The majority's investigation ignored Republican campaign
finance abuses, targeting alleged Democratic violations in over
99% of the subpoenas and document requests issued by Chairman
Burton. In fact, campaign finance abuses are bipartisan. As
documented in Part IV, some of the most serious allegations of
campaign finance abuses involve Republicans, such as the
substantial and credible evidence that Majority Whip Tom DeLay
participated in an illegal conduit contribution scheme.
The ultimate irony of the investigation may be that at the
same time that the Committee spent millions of dollars
investigating alleged Democratic campaign finance abuses, the
majority of Committee Republicans supported the efforts of the
Republican leadership to defeat campaign finance reform
legislation and to hamstring the federal agency that is charged
with enforcing campaign finance laws. Part V describes these
efforts.
I. The Investigation Was Characterized by Partisanship, Mishaps, Abuses
of Power, and Waste
The Government Reform and Oversight Committee's campaign
finance investigation was the most partisan, inept, abusive,
and wasteful congressional investigation since the McCarthy
hearings in the 1950s. According to Norman Ornstein, a
congressional expert at the conservative American Enterprise
Institute, ``the Burton investigation is going to be remembered
as a case study in how not to do a congressional investigation
and as a prime example of investigation as farce.''
2 According to the New York Times, the Committee's
efforts are a ``House investigation travesty'' and a ``parody
of a reputable investigation.'' 3 The Washington
Post called the investigation ``its own cartoon, a joke and a
deserved embarrassment.'' 4
---------------------------------------------------------------------------
\2\ House Probe of Campaign Fund-Raising Uncovers Little, Los
Angeles Times (May 2, 1998). This article and other news stories
related to the campaign finance investigation are attached to this
report as Exhibit 5.
\3\ A House Investigation Travesty, New York Times (Apr. 12, 1997).
\4\ Mr. Burton Should Step Aside, Washington Post (Mar. 20, 1997).
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This section of the minority report describes the systemic
problems that characterized the investigation since its
beginning. It reviews the partisan motives that fueled the
investigation, the majority's mishaps and mistakes, the
persistent abuses of power that plagued the investigation, and
the Committee's wasteful use of tax dollars.
A. The Investigation Was Partisan
1. Chairman Burton Promised to Conduct a Fair Investigation
Even before Chairman Burton officially began his campaign
finance investigation, serious questions were raised by others
in the Republican party as to whether the probe would be
partisan and unfair.5 Aware of these concerns,
Chairman Burton pledged to conduct a fair and bipartisan
investigation. Chairman Burton told the Capitol Hill newspaper
Roll Call, ``As chairman I have to be as non-partisan as
possible. I have to be as fair as humanly possible.''
6 He was later quoted in the New York Daily News as
saying, ``I look at myself as in a quasi-judicial position, and
I think it's important that I appear as fair as possible.''
7
---------------------------------------------------------------------------
\5\ See, e.g., The Wrong Man for a Sensitive Job, New York Times
(Nov. 20, 1996).
\6\ Burton Promises to Put Partisanship Aside in Role as Oversight
Chairman, Roll Call (Nov. 14, 1996).
\7\ Even GOP Wary of Burton, New York Daily News (June 8, 1997).
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In an attempt to appear fair, Chairman Burton promised to
look into allegations of both Republican and Democratic abuses.
At the April 10, 1997, Committee meeting, Chairman Burton
stated that ``substantial evidence of improprieties will be
pursued wherever it leads. . . . [T]he Committee's current
protocol does not . . . limit the Committee from taking
investigative leads whenever they go wherever they go within
the Committee's jurisdiction.'' 8 Similarly, as the
first hearings approached, Chairman Burton said, ``Well, I'm a
partisan Republican, but I will tell you, we're going to be
very fair and judicial in our approach to handling this whole
scandal. And where Republicans have made mistakes and broken
the law, we're going to try to get at that as well.''
9 In his opening statement at the first hearing,
Chairman Burton added, ``the committee also is examining
matters relating to the Republican National Committee and will
continue to follow the facts wherever they lead us, in either
party.'' 10
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\8\ Chairman Burton, House Committee on Government Reform and
Oversight, Business Meeting (Apr. 10, 1997).
\9\ NBC's Meet the Press (Sept. 14, 1997).
\10\ House Committee on Government Reform and Oversight, Hearing on
Campaign Finance Improprieties and Possible Violations of Law, 105th
Cong., 1st Sess., 7 (Oct. 8, 1997).
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A number of other Republican Committee members also assured
the public that the investigation would look into all
allegations of campaign finance abuses, including possible
abuses by members of Congress. Rep. Christopher Shays noted,
``our Chairman said that we have the right to look at
wrongdoing wherever we find it. . . . It is so clear that even
an idiot would understand we have jurisdiction over the
executive, legislative, and judicial branch. . . . This
Committee has 360 degrees [of] jurisdiction.'' 11
Rep. Connie Morella added, ``the wording in the protocol that
we have before us is the kind of scope that allows us . . . to
go beyond the executive branch and beyond government agencies.
So if it is congressional, so be it, it is congressional.''
12
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\11\ Rep. Shays, House Committee on Government Reform and
Oversight, Business Meeting (Apr. 10, 1997).
\12\ Rep. Morella, House Committee on Government Reform and
Oversight, Business Meeting (Apr. 10, 1997).
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2. Chairman Burton Later Admitted That He Is ``After'' the President
Despite the public pronouncements of Chairman Burton and
other Republican Committee members that the investigation would
be fair and nonpartisan, the Chairman eventually admitted that
his goal was to remove the President and damage the Democratic
party. In an April 1998 interview discussing President Clinton
with the Indianapolis Star newspaper, Chairman Burton said,
``If I could prove 10 percent of what I believe happened, he'd
be gone. This guy's a scumbag. That's why I'm after him.''
13 After the interview, the paper reported that
Chairman Burton ``is a man on a mission: to link the president
of the United States to an indictable offense.'' 14
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\13\ Burton's Pursuit of President, Indianapolis Star (Apr. 16,
1998).
\14\ Id.
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Chairman Burton reportedly expressed similar views at a
1997 luncheon hosted by GOPAC, the Republican political action
committee formerly headed by House Speaker Newt Gingrich.
According to a report in Esquire magazine:
Brashly acknowledging his own partisan motives during
this closed meeting of political allies, Burton tells
the GOPAC crowd that the current fundraising scandal
will turn out to be the Democrats' Watergate, resulting
in a net gain of ``twenty to twenty-four seats'' for
the GOP in next year's congressional elections. ``It's
over!'' he hollers.15
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\15\ All the President's Menaces, Esquire (August 1997).
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3. Over Ninety-Nine Percent of Subpoenas and Other Information Requests
Targeted Democrats
The number of subpoenas and information requests issued to
investigate allegations of Democratic fundraising abuses and
the number of subpoenas and information requests issued to
investigate allegations of Republican fundraising abuses are
not a matter of subjective dispute. These statistics show that
Chairman Burton used his unilateral subpoena power to target
Democrats almost exclusively. Out of the 1,285 information
requests, depositions, or interviews issued or taken by
Chairman Burton through September 30, 1998, 1,272--over 99%--
targeted allegations of Democratic fundraising abuses. This
statistic includes 674 out of 684 subpoenas for documents, 159
out of 161 depositions, all 18 formal interviews, 294 out of
295 document requests and interrogatories, and all 118
outstanding deposition requests and all 9 outstanding interview
requests.
Objective sources recognized the unfairness of such a
focus. Congressional Quarterly (CQ) observed, ``Unlike
[Senator] Thompson, who sought a degree of evenhandedness, the
more partisan House is looking almost exclusively at Democratic
abuses, avoiding inquiries into questionable practices employed
by Republicans to raise record-shattering amounts of money in
1996.'' 16 According to CQ, ``[e]ven some
Republicans concede that the probe's credibility is on the line
because of its one-party focus.'' 17
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\16\ House GOP Casts Wide Net in Renewed Scandal Hunt,
Congressional Quarterly (Jan. 17, 1998).
\17\ Burton Panel Faces Tough Fight Over Scope, Procedures,
Congressional Quarterly (Apr. 5, 1997).
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Although the statistics from the Committee's investigation
might suggest that wrongdoing has been committed by only the
Democratic party, statistics from the nonpartisan Federal
ElectionCommission paint the opposite picture. At the March 31,
1998, Committee hearing, both FEC Vice Chairman Scott E. Thomas and
General Counsel Lawrence Noble testified that FEC investigations of
campaign finance violations are almost equally divided between
Republicans and Democrats:
Mr. Waxman. Based on your experience at the Federal
Election Commission, are Democrats responsible for 99
percent of the campaign finance abuses?
Mr. Noble. Not based on my experience. I think it's
spread pretty evenly.
Mr. Waxman. It's what?
Mr. Noble. It's spread pretty evenly, I think.
Mr. Waxman. Spread pretty evenly. Can you estimate
what percentage of the violations you investigate are
Democratic, and what percentage are Republican?
Mr. Noble. I don't have that. Our office does not
keep figures in that regard.
Mr. Thomas. Mr. Chairman, I might be able to help you
there. I have been sensitive to this kind of criticism
since a recent Wall Street Journal article came out a
while back, wherein it suggested that someone was under
the impression 9 out of 10 of our cases were against
Republicans. And I had my assistant go back and look at
what the status was at the beginning of 1995 and again
at the beginning of 1998. Of the active cases that we
had going back in the beginning of 1995, as I strike
the percentages of the cases involving Republicans
versus Democrats, 53 percent were involving Democrats;
the remaining percentage, out of 100 percent, would
have involved Republicans, roughly the same percentage
in the beginning of 1998.18
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\18\ House Committee on Government Reform and Oversight, Hearing on
Federal Election Commission Enforcement Actions: Foreign Campaign
Contributions and Other FECA Violations, 105th Cong., 2d Sess., 108-109
(Mar. 31, 1998).
It is wrong to use taxpayer funds to engage in partisan
political activities. Yet the one-sided focus of the
investigation shows that this is exactly what transpired. The
Committee's extensive powers and resources were used virtually
exclusively to target Democrats for partisan advantage. As the
statistics and a review of the record make clear, substantial
evidence of Republican abuses was simply ignored.
4. Republican Campaign Finance Abuses Have Been Routinely Ignored
Although Chairman Burton promised that ``substantial
evidence of improprieties will be pursued wherever it leads,''
the Chairman routinely ignored substantial evidence of
Republican campaign finance improprieties. In fact, Chairman
Burton ignored Republican abuses even while investigating
parallel allegations against Democrats. Examples of these
Republican campaign finance abuses are summarized below and are
discussed in more detail in part IV.
a. Republican Favors for the Tobacco Industry
Chairman Burton held four days of hearings in January 1998
investigating the alleged influence campaign contributions to
the Democratic Party had on an Interior Department decision to
deny an Indian casino application in Hudson,
Wisconsin.19 Foreign campaign contributions were not
at issue in this inquiry. Specifically, Chairman Burton
investigated whether a former Democratic National Committee
treasurer used his influence to advance the decision, and
whether then-DNC chairman Don Fowler called the Interior
Department on behalf of DNC contributors who opposed the
casino. Yet despite numerous requests from the minority,
Chairman Burton refused to investigate similar allegations
involving Republicans.
---------------------------------------------------------------------------
\19\ House Committee on Government Reform and Oversight, Hearings
on the Department of the Interior's Denial of the Wisconsin Chippewa's
Casino Application, 105th Cong., 2d Sess., v. 1 (Jan. 21, 22, 28, 29,
1998).
---------------------------------------------------------------------------
For example, it was widely reported that the Republican
leadership included a $50 billion tax credit for the tobacco
industry in the 1997 balanced budget legislation after the
Republican National Committee received $8.8 million in
contributions from the industry. The Washington Post reported
that during the budget negotiations, House Speaker Gingrich and
Senate Majority Leader Trent Lott ``insisted on a provision
that would give tobacco companies a $50 billion credit against
the sum they had pledged to settle anti-tobacco litigation.''
20 According to the Post, Republican leaders ``were
among Congress's top recipients of tobacco industry funds,''
and the tax credit was ``pushed'' by former RNC Chairman Haley
Barbour, who became a tobacco industry lobbyist.21
Nonetheless, Chairman Burton denied written requests made by
the minority on June 10, 1997, August 29, 1997, and January 13,
1998,22 as well as a request at the January 21,
1998, Committee hearing,23 to investigate evidence
of possible Republican favors in return for tobacco industry
contributions.
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\20\ How a $50 Billion ``Orphan'' Was Adopted, Washington Post
(Aug. 17, 1997).
\21\ Id.
\22\ Letters from Rep. Waxman to Chairman Burton (June 10, 1997;
Aug. 29, 1997; and Jan. 13, 1998). A complete set of correspondence
between Rep. Waxman and Chairman Burton (comprising 143 letters from
Rep. Waxman to Chairman Burton and 44 letters from Chairman Burton to
Rep. Waxman), and other correspondence related to the investigation, is
attached to this report as Exhibit 1.
\23\ House Committee on Government Reform and Oversight, Hearings
on the Department of the Interior's Denial of the Wisconsin Chippewa's
Casino Application, 105th Cong., 2d Sess., 14 (Jan. 21, 22, 28, 29,
1998).
---------------------------------------------------------------------------
At the January 21, 1998, hearing, Chairman Burton used a
chart to explain why theCommittee was investigating the Hudson
casino matter. Chairman Burton's chart read as follows:
Hudson Facts
1. Law requires consultation with tribes
2. Lobbyists were hired to stop progress
3. Tribal meetings with big contributors: $400,000
(opponents) vs. $6,000 (proponents)
4. $350,000 of contributions to Democrats
5. Duffy and Collier leave Interior to work for
Shakopees
6. Collier carried $50,000 check to DNC on behalf of
Shakopees 24
---------------------------------------------------------------------------
\24\ Id. at 105.
At the same hearing, Rep. Waxman used a similar chart to
explain why the Republican ties to the tobacco industry should
---------------------------------------------------------------------------
be investigated. Rep. Waxman's chart read as follows:
Tobacco Facts
1. Tobacco industry hires former RNC Chairman Haley
Barbour as their lobbyist.
2. Tobacco industry gives $8.8 million to Republican
party since 1995; the three biggest contributors to the
Republican party were all tobacco companies.
3. Speaker Gingrich and Senate Majority Leader Lott
insert a secret provision into the budget bill that
gives the tobacco industry a $50 billion tax break.
4. With no discussion on the merits, the largest
special interest tax break in history is
passed.25
---------------------------------------------------------------------------
\25\ Id. at 167.
As Rep. Waxman noted in his opening statement at the
January 21 hearing, ``The $50 billion giveaway to the tobacco
industry is indistinguishable from today's hearing. In fact,
the only difference in the matter is the industry's
contributions and the benefit they received dwarf today's
subject.'' 26 Of course, a second distinction is
that the Hudson casino matter involved contributions to
Democrats while the tobacco industry tax break involved
contributions to Republicans.
---------------------------------------------------------------------------
\26\ Id. at 13-14.
---------------------------------------------------------------------------
This was not the only questionable activity involving the
Republican leadership and the tobacco industry that the
Committee failed to investigate. On July 20, 1998, the minority
staff released a report entitled, ``Air Tobacco: Campaign
Travel on Tobacco Industry Jets,'' 27 which analyzed
the tobacco industry's practice of providing its corporate
aircraft to congressional leaders and political parties for
campaign activities. The report found that (1) the tobacco
industry provides more subsidized campaign travel to
congressional leaders and political parties than any other
corporate special interest and (2) the beneficiary of
subsidized campaign travel from the tobacco industry is the
Republican congressional leadership and Republican party
organizations. In total, the report found that the Republican
leadership and Republican organizations reported 84 separate
disbursements totaling as much as $244,000 to the tobacco
industry for campaign travel from January 1, 1997, through May
31, 1998. The tobacco industry was reimbursed only for the cost
of first class travel--far below the actual cost of flying on
corporate jets--resulting in a subsidy to the recipients 15 to
45 times greater than the amount of the disbursements. Reports
by Democratic campaign organizations, meanwhile, indicated no
disbursements to the tobacco industry for travel.
---------------------------------------------------------------------------
\27\ House Committee on Government Reform and Oversight, Minority
Staff Report, Air Tobacco: Campaign Travel on Tobacco Industry Jets
(July 20, 1998). This staff report and other campaign finance reports
issued by the minority are attached to this report as Exhibit 2.
---------------------------------------------------------------------------
As reported in the Washington Post, ``The nation's leading
tobacco companies made their corporate jets available to
Republican lawmakers and GOP committees for dozens of flights
in the past year. . . . Much of the travel occurred as the
tobacco companies were trying at first to get Congress to
approve legislation to give them some protection from mounting
lawsuits, and later as the companies successfully lobbied
Republican senators to kill that legislation after the lawsuit
protection was removed.'' 28 Rep. John Linder,
chairman of the National Republican Congressional Committee,
responded that he sees ``nothing wrong'' with the travel. It is
``another big perk we get,'' he said, ``I don't apologize for
it.'' 29
---------------------------------------------------------------------------
\28\ Tobacco's Influence Takes Flight in GOP, Washington Post (July
20, 1998).
\29\ Id.
---------------------------------------------------------------------------
b. Republican Conduit Contributions
Chairman Burton held a hearing to investigate allegations
that the DNC received illegal conduit contributions made by
Charlie Trie through Manlin Foung, Joseph Landon, and David
Wang.\30\ He also held separate hearings on alleged conduit
contributions to Democrats involving German businessman Thomas
Kramer \31\ and a Venezuelan banking family.\32\ Yet Chairman
Burton refused to investigate evidence that Republicans
received similar conduit contributions.\33\
---------------------------------------------------------------------------
\30\ House Committee on Government Reform and Oversight, Hearing on
Conduit Payments to the Democratic National Committee, 105th Cong., 1st
Sess. (Oct. 9, 1997).
\31\ House Committee on Government Reform and Oversight, Hearing on
Federal Election Commission Enforcement Actions: Foreign Campaign
Contributions and Other FECA Violations, 105th Cong., 2d Sess., 108-109
(Mar. 31, 1998).
\32\ House Committee on Government Reform and Oversight, Hearing on
Venezuelan Money and the Presidential Election, 105 Cong., 2d. Sess.
(Apr. 30, 1988).
\33\ See, e.g., letters from Rep. Waxman to Chairman Burton (Apr.
29, 1997 and May 8, 1997).
---------------------------------------------------------------------------
For example, on August 6, 1998, the minority members of the
Committee (with the exception of Rep. Turner who recused
himself from the issue) requested that Chairman Burton schedule
hearings to investigate an allegation that the third-ranking
Republican in the House, Majority Whip Tom DeLay, orchestrated
conduit contributions to the campaign of Brian Babin, a
Republican congressional candidate in Texas in 1996.\34\
---------------------------------------------------------------------------
\34\ Letter from Reps. Waxman, Lantos, et al. to Chairman Burton
(Aug. 6, 1998).
---------------------------------------------------------------------------
According to an affidavit from Republican contributor Peter
F. Cloeren, Jr., Rep. DeLay advised Mr. Cloeren on ways to
funnel illegal campaign contributions to the Babin
campaign.\35\ Although Mr. Cloeren already contributed the
maximum amount allowed by law, Mr. Cloeren stated that Rep.
DeLay advised him that ``additional vehicles'' could be used to
send money to Mr. Babin, including Triad Management Services
and the campaigns of other Republican candidates. Mr. Cloeren
also admitted that he contributed $37,000 to Mr. Babin through
employees, who contributed $1,000 each with the understanding
that Mr. Cloeren would reimburse them.
---------------------------------------------------------------------------
\35\ Affidavit of Peter F. Cloeren (Aug. 6, 1998). This affidavit
is attached to this report as Exhibit 6.
---------------------------------------------------------------------------
These allegations clearly warrant further investigation.
Not only do they involve the House Majority Whip, a high-
ranking elected official, but they offer an unusual potential
for illuminating hearings because the source of the conduit
contributions appears to be willing to talk about the
contributions voluntarily. Nevertheless, Chairman Burton has
not even responded to the minority's request for an
investigation.
The Cloeren contributions were not the only conduit
contributions to Republican candidates. During the October 9,
1997, Committee hearing, Rep. Waxman noted, ``Conduit payments
are, of course, illegal; unfortunately, they've also become
much too common. . . . The Federal Election Commission is
currently investigating 27 conduit payments involving 214
individuals.'' \36\ Yet despite minority requests, Chairman
Burton refused to investigate any conduit contributions
involving Republicans, including: Simon Fireman, the former
vice chairman of the Dole campaign's finance committee, who
pled guilty to making more than $100,000 in illegal conduit
contributions; \37\ Nevada-based Deluca Liquor & Wine, Ltd. and
its vice president, Ray Norvell, who pleaded guilty to making
$10,000 in illegal conduit contributions to the Dole campaign;
\38\ and Pennsylvania-based Empire Sanitary Landfill, which
pleaded guilty to funneling $129,000 in corporate funds to
campaigns through its employees, including $80,000 to the Dole
campaign.\39\
---------------------------------------------------------------------------
\36\ House Committee on Government Reform and Oversight, Hearing on
Conduit Payments to the Democratic National Committee, 105th Cong., 1st
Sess. (Oct. 9, 1997).
\37\ See Ex-Dole Finance Official Is Fined for Illegal Gifts,
Washington Post (Oct. 24, 1996).
\38\ See LV Executive Admits Dole Contribution, Las Vegas Review-
Journal (June 6, 1998).
\39\ See Firm to Pay $8 Million Fine for Illegal Campaign Gifts,
Washington Post (Oct. 9, 1997).
---------------------------------------------------------------------------
c. Republican Fundraising on Federal Property
Chairman Burton extensively investigated allegations that
President Clinton and Vice President Gore used the White House
and other federal property, such as Air Force I, to solicit
campaign contributions.\40\ Yet at the same time he was
investigating fundraising by Democrats on federal property,
Chairman Burton refused requests from the minority to
investigate evidence that Republicans have used federal
property for fundraising.
---------------------------------------------------------------------------
\40\ See, e.g., Subpoena from House Committee on Government Reform
and Oversight to the Executive Office of the President (Mar. 4, 1997)
(The subpoena included 45 separate requests for ``all records relating
to'' over 200 different entities, persons, and executive branch
functions, including all official delegation trips abroad, fundraising
events and activities, and guest lists for various official and party
activities).
---------------------------------------------------------------------------
For example, although White House videotapes clearly show
that events were held for major Republican contributors in the
Reagan White House,\41\ Chairman Burton denied minority
requests to investigate these events.\42\
---------------------------------------------------------------------------
\41\ House Committee on Government Reform and Oversight, Hearings
on White House Compliance With Committee Subpoenas, 105th Cong., 1st
Sess., 163 (Nov. 6, 7, 1997).
\42\ See e.g., Letter from Rep. Waxman to Chairman Burton (June 10,
1997).
---------------------------------------------------------------------------
Additionally, Republicans in Congress--led by Speaker
Gingrich--have used federal property for fundraising purposes.
Invitations to the 1995 Republican House-Senate dinner put a
price tag on access to the Republican leadership in federal
buildings: $15,000 contributors were invited to a ``Senate
Majority Leader's Breakfast'' hosted by Senator Bob Dole in the
``Senate Caucus Room,'' and $45,000 contributors were invited
to a luncheon hosted by Speaker Gingrich in the ``Great Hall of
the Library of Congress.'' \43\ Nevertheless, despite the
similarities between the Republican practices in Congress and
the Democratic practices in the White House, Chairman Burton
refused to respond to minority requests to investigate the
congressional practices.\44\
---------------------------------------------------------------------------
\43\ Waxman Cites Republicans for ``Selling Access,'' Washington
Post (Mar. 11, 1997). See also Letter from Rep. Waxman to Chairman
Burton (Mar. 13, 1997).
\44\ See Letter from Rep. Waxman to Chairman Burton (June 10,
1997).
---------------------------------------------------------------------------
d. Illegal Foreign Contributions to Republicans
One major focus of Chairman Burton's investigation was to
determine whether there was a concerted effort by the White
House or the DNC to solicit illegal foreign campaign
contributions. Yet Chairman Burton was reluctant to investigate
significant evidence that Speaker Gingrich and other Republican
leaders may have solicited illegal foreign contributions.
One of the primary figures investigated by Chairman Burton
was Ted Sioeng, who was described by the Chairman as ``an
Indonesian-born businessman who travels on a Belize passport,
suspected by committee members of working along with his
family, on behalf of the Chinese Government interests in the
United States.'' \45\ According to Chairman Burton, Mr. Sioeng
``has a major stake'' in Red Pagoda cigarettes, which `` is
owned by the Chinese Government, and it is a convenient way to
funnel money into campaigns in the United States by Ted
Sioeng.'' \46\
---------------------------------------------------------------------------
\45\ Congressional Record, H4545 (June 11, 1998).
\46\ Congressional Record, H3058 (May 12, 1998).
---------------------------------------------------------------------------
During the course of the Committee's investigation,
evidence emerged that linked Mr. Sioeng to Speaker Gingrich. At
his deposition, for example, California State Treasurer Matt
Fong, a Republican, testified that he arranged for Mr. Sioeng
to meet privately with Speaker Gingrich in the Speaker's
office.\47\ According to press accounts, days after this
meeting Mr. Sioeng contributed $50,000 through his daughter's
company, Panda Industries, to the National Policy Forum, a
subsidiary of the RNC,\48\ and ``sat in a place of honor next
to Gingrich . . . [at a] reception for Gingrich at a Beverly
Hills hotel.'' \49\
---------------------------------------------------------------------------
\47\ Deposition of Matthew K. Fong, House Committee on Government
Reform and Oversight, 66-68 (Mar. 2, 1998). All depositions referenced
in this section, unless otherwise noted, were taken by the House
Committee on Government Reform and Oversight.
\48\ State Treasurer Linked to Asian Funds, Los Angeles Times (Feb.
25, 1998).
\49\ Id.
---------------------------------------------------------------------------
Rep. Waxman repeatedly wrote Chairman Burton to request
further investigation of the ties between Mr. Sioeng and
Speaker Gingrich.\50\ On June 11, 1998, for example, Rep.
Waxman wrote Chairman Burton to request that Chairman Burton
fulfill the commitment he made at the April 30, 1998, Committee
meeting when he pledged that ``our entire investigation
involving Ted Sioeng and the foreign money he gave the
campaigns is exploring both Democrat and Republican
contributions.'' \51\ Chairman Burton, however, never responded
to these requests.
---------------------------------------------------------------------------
\50\ See, e.g., Letters from Rep. Waxman to Chairman Burton (Mar.
20, 1998 and June 11, 1998).
\51\ Letter from Rep. Waxman to Chairman Burton (June 11, 1998)
(quoting Apr. 30, 1998, Committee meeting).
---------------------------------------------------------------------------
Chairman Burton also refused to investigate properly
evidence that former RNC Chairman Haley Barbour used the
National Policy Forum to solicit foreign contributions from
Hong Kong businessman Ambrous Young. According to news reports
and the Senate Governmental Affairs Committee investigation,
the RNC received millions of dollars in last-minute campaign
funds in 1994 after Mr. Barbour secured $2.2 million in loan
guarantees from Mr. Young.\52\ Although Chairman Burton at
first agreed to minority requests to investigate the NPF
allegations (and even sent subpoenas to the NPF, Ambrous Young,
and others involved in the transaction),\53\ Chairman Burton
dropped the investigation as soon as it became clear that the
continued investigation of this issue would require Chairman
Burton to issue a subpoena to Mr. Barbour. In fact, Chairman
Burton never even responded to Rep. Waxman's June 17, 1997,
letter requesting that Chairman Burton issue a subpoena to Mr.
Barbour.\54\
---------------------------------------------------------------------------
\52\ The G.O.P.'s Own China Connection, Time (May 5, 1997).
\53\ Subpoenas from House Committee on Government Reform and
Oversight to: Benton L. Becker (June 5, 1997); NPF (June 5, 1997);
Richard Richards (July 31, 1997); Signet Bank (June 5, 1997); Ambrous
Young (June 5, 1997); Young Brothers Development (USA), Inc. (June 5,
1997); Young Brothers Development Co., Ltd. (June 5, 1997); and
Committee document request to the RNC (June 6, 1997).
\54\ Letter from Rep. Waxman to Chairman Burton (June 17, 1997)
(quoting Letter from Richard Richards to Haley Barbour (Sept. 17,
1996)).
---------------------------------------------------------------------------
There also were a number of allegations involving Chairman
Burton's relationships with foreign governments and entities
that were not investigated by the Committee. These were
described in news articles in the Washington Post, New York
Times, and many other papers.\55\
---------------------------------------------------------------------------
\55\ See, e.g., Pakistan Lobbyist's Memo Alleges Shakedown by House
Probe Leader, Washington Post (Mar. 19, 1997); Representative Is
Accused of Pressuring a Lobbyist, New York Times (Mar. 19, 1997); FBI
Probes Funds Charge Against Burton, Washington Post (Mar. 22, 1997);
House Chairman Linked to Lobbyist for Mobutu, New York Times (May 15,
1997); Burton, Others, Accepted Illegal Funds, The Hill (Apr. 16,
1997); Education Dept. Official Says Burton Pressured Him On Behalf of
Contributor Who Runs Caribbean School, Roll Call (May 12, 1997); Burton
Echoed Turkish Line After Interest Group Donations, The Hill (May 28,
1997).
---------------------------------------------------------------------------
e. The Activities of Triad Management Services
Even when Chairman Burton publicly promised in Committee
meetings that the Committee would investigate allegations of
Republican abuses, he later refused to fulfill these promises.
One noteworthy example is the activities of Triad Management
Services.
According to news reports and evidence uncovered during the
Senate investigation, Triad is a for-profit political
consulting group founded by former Oliver North fundraiser
Carolyn Malenick to serve as a ``rapid-fire'' attack mechanism
for Republican candidates.\56\ The Wall Street Journal reported
that Triad advised Republican contributors on ways to
circumvent federal contribution limits to individual candidates
by laundering funds through other candidates and PACs who would
then make a contribution to the contributor's candidate of
choice.\57\ According to Triad's attorney, Mark Braden, Triad
spent over $3 million on ads against Democratic candidates in
about 40 races across the country. The ads were paid for by two
non-profit groups, Citizens for Reform and Citizens for the
Republic Education Fund, funded by Triad.\58\ Triad was
especially active in Kansas, where it spent over $1 million to
assist Senator Sam Brownback and Reps. Vince Snowbarger, Todd
Tiahrt, and Jim Ryun.
---------------------------------------------------------------------------
\56\ For Their Targets, Mystery Groups' Ads Hit Like Attacks From
Nowhere, Washington Post (Mar. 9, 1997).
\57\ Adviser Helps Political Donors Spread Their Wealth, Wall
Street Journal (Apr. 10, 1997).
\58\ Bank Records Provide Insights into Triad Funding; Firm Put $1
Million into Kansas Races, Kansas City Star (Oct. 31, 1997).
---------------------------------------------------------------------------
The minority repeatedly urged Chairman Burton to
investigate these allegations. At the November 7, 1997,
Committee hearing, Rep. Carolyn Maloney asked Chairman Burton,
``I would like to know when you are going to issue subpoenas to
the groups and individuals involved in the Triad Management
scheme to violate or evade the campaign finance laws?''
Chairman Burton responded, ``We are looking at it. And we very
well may do that.'' \59\ At the following hearing, Rep. Thomas
Barrett asked Chairman Burton, ``What about the Triad
Management? Are we looking at that, Mr. Chairman?'' Chairman
Burton replied, ``I am going to send a subpoena to Triad. Does
that satisfy you?'' \60\ One month later at another Committee
hearing, Rep. Tom Lantos asked FBI Director Louis Freeh to look
into Triad's activities. Following this request, Chairman
Burton stated, ``There will be, as I said before, an
investigation into the Triad matter.'' \61\
---------------------------------------------------------------------------
\59\ House Committee on Government Reform and Oversight, Hearings
on White House Compliance with Committee Subpoenas, 105th Cong., 1st
sess., 204 (Nov. 6, 7, 1997).
\60\ House Committee on Government Reform and Oversight, Hearings
on Johnny Chung: His Unusual Access to the White House, His Political
Donations and Related Matters, 105th Cong., 1st Sess., 89 (Nov. 13, 14,
1997).
\61\ House Committee on Government Reform and Oversight, Hearings
on the Current Implementation of the Independent Counsel Act, 105th
Cong., 1st. Sess., v. 2, 47-49 (Dec. 9, 10, 1997).
---------------------------------------------------------------------------
Despite this pledge, Chairman Burton never investigated
Triad's activities. Chairman Burton did not issue any subpoenas
to Triad, Citizens for Reform, or Citizens for the Republic
Education Fund; and no depositions were taken of Ms. Malenick,
Mr. Braden, or any Triad employee.
Ironically, at the same time he was refusing to investigate
Triad for alleged federal elections law abuses, Chairman Burton
was issuing 14 subpoenas to investigate allegations that the
Kansas Democratic party evaded Kansas state elections law.\62\
---------------------------------------------------------------------------
\62\ Subpoenas from the House Committee on Government Reform and
Oversight to: Richard Alldritt, Tom Beall, Steve Boyda, Micheline Z.
Burger, Dorothy Davis, Henry Helgerson, Jerry Karr, Dennis Langley,
Marge Petty, Doug Walker, and Constance Wray (Feb. 17, 1998). Tom Beall
and Dennis Langley (Mar. 17, 1998); and the Kansas Democratic Party
(Mar. 19, 1998). Several of these individuals first learned that they
were subject to this investigation through press reports rather than
from the Committee. See e.g., House Inquiry Turns to Kansas, Kansas
City Star (Nov. 18, 1997); Fund-Raising Probe Heads for Kansas, Wichita
Eagle (Nov. 19, 1997); Deposition of Douglas Walker, 44-45 (Feb. 23,
1998); and Deposition of Senator Marge Petty, 39-40 (Feb. 24, 1998).
---------------------------------------------------------------------------
5. The Majority Doctored Evidence and Suppressed Testimony to Make
Democrats Appear Culpable
The partisanship that plagued the Committee's investigation
went beyond targeting Democrats and ignoring Republican abuses.
Chairman Burton also engaged in the practice of providing the
public with selective evidence that implicated Democrats in
wrongdoing while withholding exculpatory evidence. The most
egregious example of this practice involved the selective
release of edited transcripts of Webster Hubbell's prison phone
recordings.
a. The Webster Hubbell Tapes
On April 30, 1998, Chairman Burton released to the media
edited transcripts of 54 tapes of Mr. Hubbell's prison
telephone conversations subpoenaed from the Bureau of
Prisons.\63\ On May 3, Rep. Waxman wrote Chairman Burton to
protest the release of the transcripts and to complain that
Chairman Burton's ``distortion in both words and meaning is
inexcusable.'' \64\ The following day, after reviewing the
transcripts and the tapes, the minority staff issued a report
detailing the ``numerous alterations and omissions in the
Master Log released by Mr. Burton.'' \65\ This prompted Rep.
Waxman to write to Chairman Burton, ``It now appears that it is
you or your staff who have intentionally altered the
transcripts of tapes. . . . [A]s far as I am aware, [this
action] is without precedent in the history of the U.S. House
of Representatives.'' \66\
---------------------------------------------------------------------------
\63\ Subpoena from House Committee on Government Reform and
Oversight to Federal Prison Camp, Cumberland, Maryland (May 8, 1997).
\64\ Letter from Rep. Waxman to Chairman Burton (May 8, 1998).
\65\ Memorandum Re: Analysis of Hubbell Master Tape Log, Government
Reform and Oversight Committee Minority Staff (May 4, 1998).
\66\ Letter from Rep. Waxman to Chairman Burton (May 4, 1998).
---------------------------------------------------------------------------
Following Chairman Burton's release of the transcripts, it
was widely reported that the transcripts omitted crucial
portions of the conversations that contained exculpatory
information.\67\ The Washington Post found, for example, that
``the excerpts left out a statement by Hubbell that First Lady
Hillary Rodham Clinton has `no idea' of billing irregularities
at the Little Rock law firm where they both worked. Also
deleted was an assertion by Hubbell that he was not being paid
hush money to keep him from cooperating with independent
counsel Kenneth W. Starr's Whitewater investigation.'' \68\
Side-by-side comparisons in the Washington Post and other
newspapers of Chairman Burton's transcripts with what was
actually said on the tapes revealed large discrepancies.\69\
---------------------------------------------------------------------------
\67\ See, e.g., Bridling G.O.P. Leader Says Tapes Speak for
Themselves, New York Times (May 5, 1998); Burton Defends Hubbell
Transcript Actions, Washington Post (May 5, 1998); Portions of Hubbell
Prison Tapes Released, Los Angeles Times (May 5, 1998). See also
letters from Rep. Waxman to Chairman Burton (May 3, 1998 and May 4,
1998): letters from Chairman Burton to Rep. Waxman (May 4, 1998);
Memorandum Re: Analysis of Hubbell Master Tape Log, Government Reform
and Oversight Committee Minority Staff (May 4, 1998).
\68\ Democrats Hit Burton Over Tapes of Hubbell, Washington Post
(May 4, 1998).
\69\ See, e.g., Burton Defends Hubbell Transcript Actions,
Washington Post (May 5, 1998); Excerpts from Prison Conversations With
Hubbell, New York Times (May 5, 1998).
---------------------------------------------------------------------------
Chairman Burton's response to this criticism was to release
the tapes in their entirety, without regard for Mr. Hubbell's
legitimate privacy interests. As described by the Los Angeles
Times, ``The tapes released Monday--or, more accurately, tossed
through the air by a Burton aide to a horde of reporters in a
House committee room--cover several months' worth of
conversations `Inmate Hubbell,' as prison officials called him,
had with his wife, sister, attorneys and daughters in 1996.''
\70\
---------------------------------------------------------------------------
\70\ Portions of Hubbell Prison Tapes Released, Los Angeles Times
(May 5, 1998).
---------------------------------------------------------------------------
In the following days, even Republican members criticized
Chairman Burton's actions. Ata closed Republican conference
meeting, Speaker Gingrich told Chairman Burton, ``I'm embarrassed for
you, I'm embarrassed for myself, and I'm embarrassed for the conference
at the circus that went on at your committee.'' \71\ And Committee
Republican Christopher Shays said that the release ``calls into
question our investigation. It reduces credibility when these kinds of
things happen.'' \72\
---------------------------------------------------------------------------
\71\ Burton Apologizes to GOP, Washington Post (May 7, 1998).
\72\ Newt Defends Rep. In Tape Release, Associated Press (May 6,
1998).
---------------------------------------------------------------------------
Similarly, scores of newspaper editorials chastised
Chairman Burton's conduct with headlines such as ``Tale of the
Tapes--Rep. Dan Burton Brings a Serious Inquiry Into
Disrepute'';\73\ ``Congressman Plays Dirty With Tapes'';\74\
and ``Abuse of Privacy; Burton Should Be Censured for Leaking
Excerpts from Hubbell's Jail Conversations.'' \75\ The
Washington Post editorialized, ``Dan Burton was every bit as
irresponsible and ham-handed as has been charged in releasing,
as he did, doctored transcripts of the former associate
attorney general's prison phone conversations.'' \76\
---------------------------------------------------------------------------
\73\ Pittsburgh Post-Gazette (May 8, 1998).
\74\ Allentown Morning Call (May 5, 1998).
\75\ Harrisburg Patriot (May 5, 1998).
\76\ Mr. Burton's Transcripts, Washington Post (May 6, 1998).
---------------------------------------------------------------------------
b. Other Examples of the Selective Use of Evidence
The Hubbell tapes were not the only instance in which
Chairman Burton refused to present exonerating evidence.
Chairman Burton rejected the minority's request to call a
number of key witnesses to testify at the Hudson casino
hearings in January 1998.\77\ For example, Chairman Burton
rejected the minority's request to call to testify locally
elected officials who were on the record against the proposal,
including former Republican representative Steve Gunderson,
Republican state representative Sheila Harsdorf, and Republican
governor Tommy Thompson.\78\ These witnesses would have
corroborated the Interior Department's contention that there
was strong local opposition to the casino, which, rather than
political contributions, was the crucial factor in the
Department's decision to deny the casino application.\79\
---------------------------------------------------------------------------
\77\ See, e.g., Letter from Rep. Waxman to Chairman Burton (Jan.
16, 1998).
\78\ Letters from Rep. Waxman to Chairman Burton (Jan. 12, 1998 and
Jan. 16, 1998).
\79\ The majority also rejected the minority's request to call
Deputy Director of the Bureau of Indian Affairs, Hilda Manuel, to
testify. Ms. Manuel is the top-ranking career civil servant at the
Bureau of Indian Affairs and played a key role in the Department's
decision to deny the application. She would have told the Committee
about a conversation with Secretary Babbitt in which he said he did not
want a role in deciding the outcome of the application--evidence that
directly refuted the majority's allegations. Deposition of Hilda
Manuel, 98 (Jan. 6, 1998).
---------------------------------------------------------------------------
Similarly, at the April 30, 1998, hearing on Venezuelan
money in the 1992 campaign, Chairman Burton called two
Assistant District Attorneys from Manhattan to testify about
evidence they uncovered of foreign conduit contributions, which
they had provided to the Department of Justice. The majority
alleged that the Department of Justice failed to properly
investigate the matter because it involved a Democratic
fundraiser. Chairman Burton, however, did not include
representatives of the Department of Justice at the hearing. In
response to the minority's concerns that the hearing was one-
sided, Chairman Burton promised ``we will have the Justice
Department up here. It's now 4 o'clock, and we didn't want to
run this thing on into the late night hours, but we will have
the Justice Department up here and we will ask them the
questions that were raised today.'' \80\ Chairman Burton never
in fact allowed the Justice Department to respond to the
allegations.
---------------------------------------------------------------------------
\80\ House Committee on Government Reform and Oversight, Hearing on
Venezuelan Money and Presidential Election, 105th Cong., 2d Sess., 109
(Apr. 30, 1998).
---------------------------------------------------------------------------
This pattern was repeated when Chairman Burton refused to
allow Attorney General Janet Reno to testify at the August 4,
1998, hearing on her decision not to appoint an independent
counsel to investigate campaign finance violations. The
independent counsel statute grants the authority to appoint an
independent counsel solely to the Attorney General. Yet
Chairman Burton allowed only the testimony of Department of
Justice officials who recommended the appointment of an
independent counsel. He refused to allow Attorney General Reno
the opportunity to present the other side of the issue.\81\
---------------------------------------------------------------------------
\81\ House Committee on Government Reform and Oversight, Hearing on
the Need for an Independent Counsel in the Campaign Finance
Investigation, 105th Cong., 2d. Sess., 66-67 (Aug. 4, 1998).
---------------------------------------------------------------------------
B. The Investigation Was Plagued by Mishaps
From the outset of the investigation in January 1997, the
Committee's investigation was characterized by mishaps and
mistakes. The Committee issued subpoenas to the wrong
witnesses, staked out the home of an innocent individual,
released the President's private fax number, and caused an
international incident on a trip to Taiwan. As the Atlanta
Constitution commented in an editorial, ``These fellows make
Inspector Clouseau look like Sherlock Holmes.'' \82\ The
Committee's problems were summed up in one news article
headline which read, ``Burton's fund-raising probe efforts
seems jinxed.'' \83\
---------------------------------------------------------------------------
\82\ Clinton's Foes Bungle Again, Atlanta Constitution (May 5,
1998).
\83\ Burton's Fund-Raising Probe Effort Seems Jinxed, Associated
Press (Sept. 17, 1997).
---------------------------------------------------------------------------
1. Subpoenas Issued to the Wrong Individuals
On at least three separate occasions, Chairman Burton
issued subpoenas to individuals with no connection to the
campaign finance investigation. On April 3, 1997, the majority
issued a subpoena for the bank records of Georgetown University
history professor Chi Wang instead of Los Angeles DNC
contributor Chi Ruan Wang.\84\ The 65-year-old professor told
the Los Angeles Times, ``This is unbelievable. . . . I have no
idea why they have my name.'' \85\ The Committee withdrew the
subpoena, but rather than apologizing to Mr. Wang, a majority
investigator implied to the Los Angeles Times that Professor
Wang may have still been under investigation and refused to
acknowledge that the majority had made a mistake, stating:
``Whether [Professor Wang] deserves a subpoena or not, we
haven't decided, We've put it on hold . . . we're not sure we
made [a mistake].'' \86\
---------------------------------------------------------------------------
\84\ Subpoena from House Committee on Government Reform and
Oversight to Chevy Chase Bank F.S.B. and the National Capital Bank of
Washington (Apr. 3, 1997).
\85\ Investigators Mistakenly Issue Subpoena to Wrong DNC Donor,
Los Angeles Times (Apr. 15, 1997).
\86\ Id.
---------------------------------------------------------------------------
In September 1997, the Committee issued a subpoena to Brian
Kim, a mail carrier from Downey, California.\87\ A U.S. marshal
tried to serve the subpoena on Mr. Kim at the U.S. Post Office.
Unfortunately, the majority had identified the wrong Brian Kim.
Mr. Kim said he was ``scared'' and ``embarrassed'' by the
incident because his supervisor thought he had done something
wrong. Mr. Kim called the majority and told them that they had
the wrong person. He was told to write a letter to the majority
confirming that fact, which he did. He never received any
apology from the majority.\88\
---------------------------------------------------------------------------
\87\ Subpoena from House Committee on Government Reform and
Oversight to Brian Kim (Sept. 2, 1997).
\88\ Minority counsel phone interview of Brian Kim (Sept. 1997).
---------------------------------------------------------------------------
On month later, in October 1997, the majority subpoenaed
the phone records of LiPing Chen Hudson of Virginia.\89\ Mrs.
Hudson and her husband became aware of the subpoena only after
they received notice from their local phone carrier that the
documents had been subpoenaed. The Hudsons have not been
involved in any political campaign this decade, raising their
concerns that Mrs. Hudson was targeted because of her ethnic
background.\90\ In response to the error, majority spokesman
told the Wall Street Journal, ``To err is human''; he then
passed the blame onto the telephone company for not double-
checking with the majority before producing the records.\91\
---------------------------------------------------------------------------
\89\ Subpoena from House Committee on Government Reform and
Oversight to Bell Atlantic-Virginia, Inc. re: LiPing Chen Hudson (Sept.
19, 1997).
\90\ Letter from Rep. James P. Moran to Chairman Burton (Oct. 28,
1997).
\91\ House Panel's Campaign-Finance Probe Promises to be More
Militant Than Senate's Investigation, Wall Street Journal (Nov. 5,
1997).
---------------------------------------------------------------------------
2. The Committee's ``Stake Out'' of Felix Ma
As discussed below, the majority's practice is to conceal
its domestic investigative travel from the minority. On a few
occasions when minority staff was permitted to travel with the
majority staff, however, the minority observed the majority
staff use inappropriate and inept investigative techniques.
For example, during a nine-day investigative trip to Los
Angeles in August 1997, Committee staff conspicuously ``staked
out'' the residence of Felix Ma, whom the Committee hoped to
interview. As CBS reported on Face the Nation, when Mr. Ma
returned home, the investigators ``became a virtual SWAT team,
accosting him as he left his car.'' \92\ It turned out that the
Committee staff was interrogating the wrong Felix Ma.
Afterwards, Mr. Ma introduced the investigators to his wife as
the ``political police.'' \93\
---------------------------------------------------------------------------
\92\ CBS's Face the Nation (Sept. 14, 1997).
\93\ Burton's Men Nailed Wrong Ma, Washington Post (Sept. 12,
1997). On the same trip, majority staff also snuck into and disrupted a
condominium complex in a futile effort to locate a witness known as
``Mr. Negara.'' In this instance, the majority staff rang the doorbell
of a condominium unit occupied by a person with the last name Negara
without knowing whether he was the ``Mr. Negara'' for whom they were
looking. There was no answer. Despite the uncertainty that this was the
correct individual, the staff trespassed onto the property by slipping
into the building behind another individual. After knocking loudly and
persistently on Mr. Negara's door and receiving no answer, the majority
counsel knocked on neighboring doors, asked passersby if they knew Mr.
Negara, and contacted the building manager and questioned her about Mr.
Negara. The manager complained that these men had entered the building
without permission from the residents or the management. Id.
Also on the trip, the majority staff attempted to contact Cindy
Tashima. Ms. Tashima, who is a ``diminutive'' woman and was home alone,
was intimidated by the large men in dark suits repeatedly pounding on
her door, who she later described as ``look[ing] like the Men in
Black,'' Id.; CBS's Face the Nation (Sept. 14, 1997). Ms. Tashima's
only connection to the investigation was that in 1990 she worked for
less than one year at a company listed in 1991 as the employer of an
individual who had made a suspect contribution. Letter from Rep. Waxman
to Chairman Burton (Sept. 4, 1997).
---------------------------------------------------------------------------
3. The Committee's Release of the President's Private Fax Number
Another mishap involved the accidental release of the
President's private fax number. As the Atlanta Journal-
Constitution reported, ``The House committee investigating
campaign fundraising briefly posted President Clinton's
personal fax number on the Internet . . . despite a request
that it keep the number private.'' \94\ The Committee obtained
the fax number during a deposition and failed to redact the
number before posting the deposition on its web page.\95\ As a
result of this mistake, the President was forced to change the
fax number.
---------------------------------------------------------------------------
\94\ Clinton's Private Fax Number Put on Web in ``Lapse,'' Atlanta
Journal-Constitution (Nov. 22, 1997).
\95\ Deposition of Dick Morris, 90 (Aug. 21, 1997).
---------------------------------------------------------------------------
4. The Committee Actions in Taiwan
Chairman Burton sent five investigators to Taiwan in March
1998 to interrogate high-level Taiwanese officials and
businessmen about campaign contributions.\96\ The questioning
enraged members of the Taiwanese Parliament who ``claimed that
the dignity and judicial sovereignty of the nation has been
infringed upon.'' \97\ According to a Taiwanese newspaper, the
lawmakers ``condemned'' the Ministry of Foreign Affairs for
allowing the investigators into the country and said ``that
Taiwan's international image had been damaged,'' thus setting
off an international diplomatic incident.\98\ As a result,
``[t]he investigators left with little more than a long list of
canceled meetings.'' \99\
---------------------------------------------------------------------------
\96\ Burton's Campaign-Finance Probe Is Drawing Criticism for
Mounting Costs and Slow Progress, Wall Street Journal (Mar. 27, 1998).
\97\ Visit by US Aides Sparks Controversy, Free China Journal (Mar.
20, 1998).
\98\ MOFA Rebuked Over Handling of Probe, China News (Mar. 19,
1998).
\99\ Burton's Campaign-Finance Probe Is Drawing Criticism for
Mounting Costs and Slow Progress, Wall Street Journal (Mar. 27, 1998).
---------------------------------------------------------------------------
5. Insensitivity to the Concerns of Asian-Americans
Unfortunately, many of the victims of the Committee's
improper conduct were Asian-Americans who were subject to
highly intrusive subpoenas seeking their personal banking
records, credit card records, phone records, and travel
records. In total, 423 out of the Committee's 684 documents
subpoenas sought information relating to individuals with Asian
surnames. The Committee also sought INS records for many Asian-
Americans, even though, in many instances, this information was
decades old and had no relevance to this investigation.\100\
This raises serious questions of whether the investigation
unfairly targeted Asian-Americans.
---------------------------------------------------------------------------
\100\ See, e.g., Committee document request to the Immigration and
Naturalization Service (Aug. 13, 1997) (Committee requested that INS
``provide the Committee with a copy of any I94 records and the entire
contents of the alien registration a.k.a. `A' files'' for 47
individuals).
---------------------------------------------------------------------------
During the House and Senate campaign finance
investigations, Asian-American activists expressed their
concern that their political participation was being unfairly
scrutinized. Karen Narasaki of the National Asian Pacific
American Legal Consortium said that the investigations imposed
``a chilling impact on Asian-American political involvement.''
\101\ Francey Lim Youngberg of the Asian Pacific American
Institute for Congressional Studies commented, ``We don't
condone any illegal activities, but we don't want the actions
of a few individuals to taint a whole community.'' \102\ As a
result of these concerns, a coalition of Asian-American civil
rights groups filed a complaint with the U.S. Commission on
Civil Rights in September 1997, alleging that public officials,
the two political parties, and the media have ``engaged in a
pattern of bias based on race and national origin.'' According
to the complaint, there is a clear pattern of ``bias and
unequal treatment destructive of the rights and interests of
Asian-Pacific Americans and legal immigrants.'' \103\
---------------------------------------------------------------------------
\101\ Asian-Americans See Rising Racism, USA Today (July 15, 1997).
\102\ Asian American Donors Feel Stigmatized: DNC Puts Unwanted
Focus on Growing Political Group, Washington Post (Sept. 8, 1997).
\103\ Asian Pacific American Petition to the U.S. Commission on
Civil Rights (Sept. 11, 1997).
---------------------------------------------------------------------------
At the Committee's September 24, 1997, business meeting,
Rep. Tom Lantos spoke about the harmful perceptions created by
this investigation:
I believe that there is a grave danger that
stereotyping and Asian bashing will become and, in many
instances, have become part and parcel of this
investigation. . . . This investigation, perhaps
inadvertently, has clearly contributed to stereotyping
and racebaiting. As one who is singularly conscious of
this issue, I want to call attention to this issue
because Asian-Americans have as much right to
participate in the political process as do Americans of
any other origin. Deliberately or otherwise, Asian-
Americans have been the target of both of these
investigations to an unacceptable and overwhelming
degree . . . The last thing this country needs at this
stage is an attempt to whip up racial tensions and
Asian bashing. These hearings clearly have contributed
to a climate of xenophobia, which we ought to
avoid.\104\
---------------------------------------------------------------------------
\104\ Rep. Lantos, Committee on Government Reform and Oversight,
Business Meeting (Sept. 27, 1997).
This insensitivity to the concerns of Asian-Americans
regarding the investigation was also evident in the full House.
On July 22, 1997, Rep. Jack Kingston went to the House floor
and stated that the illegal donations were ``only the tip of
the egg roll.'' \105\ Majority Whip Tom DeLay of Texas mocked
the DNC in a floor speech in July for accepting contributions
from people with foreign-sounding names:
---------------------------------------------------------------------------
\105\ Rep. Kingston, Congressional Record, H5500 (July 22, 1997).
If you have a friend by the name of Arief and Soraya,
and I cannot even pronounce the last name, Wiriadinata,
something like that, who donated $450,000 to the DNC
and was friends with a guy named Johnny Huang, and
later returned it because Wiriadinata could not explain
where it came from, then probably there is a high
probability that it's money from foreign nationals . .
. I could go on with John Lee and Cheong Am, Yogesh
Ghandi, Ng Lap Seng, Supreme Master Suma Ching Hai and
George Psaltis.\106\
---------------------------------------------------------------------------
\106\ Rep. DeLay, Congressional Record, H5485 (July 14, 1998).
After being criticized for his floor statement, however, Rep. DeLay
said, ``In no way did I mean to suggest that Asian-Americans should not
participate in our democracy,'' House GOP Whip Assailed Over Remarks on
Foreign-Sounding Names, Apologizes, Boston Globe (July 18, 1998).
Regrettably, this insensitivity reinforced the views of
many who saw a racial bias in the Committee's investigation of
alleged campaign finance abuses.
6. Republican Acknowledgment of the Committee's Incompetence
These mishaps and mistakes have embarrassed even Republican
members and staff. They have called the investigation ``a big
disaster,'' \107\ ``incompetent,'' \108\ ``unprofessional,''
\109\ and ``[a]n embarrassment, like Keystone Cops.'' \110\
According to one former senior Republican investigator, Charles
Little, ``[n]inety percent of the staff doesn't have a clue as
to how to conduct an investigation.'' \111\
---------------------------------------------------------------------------
\107\ GOP Memo Targets 3 N.E. Congressmen to Co-Opt Democrats,
Boston Globe (May 6, 1998).
\108\ Cox Leads Defeat of Burton, Waxman Agreement, Roll Call
(Sept. 29, 1997).
\109\ Burton Tape Fiasco Pitted Panel's Pros Vs. Pols, The Hill
(May 13, 1998).
\110\ CNN's Inside Politics (Sept. 16, 1997).
\111\ Burton Tape Fiasco Pitted Panel's Pros Vs. Pols, The Hill
(May 13, 1998).
---------------------------------------------------------------------------
The majority's first chief counsel, John Rowley, resigned
in protest over the Committee's abuses. In his letter of
resignation, Mr. Rowley stated that he had ``been unable to
implement the standards of professional conduct I have been
accustomed to at the U.S. Attorney's office.'' \112\ The
Washington Times reported that Mr. Rowley was concerned that
David Bossie, Chairman Burton's chief investigator, ``was
trying to use the probe to `slime' the Democrats, while Mr.
Rowley wanted `to follow where the evidence leads.' '' \113\
---------------------------------------------------------------------------
\112\ Letter from John P. Rowley III to Chairman Burton (July 1,
1997).
\113\ Administration Dismisses Finance Probes as `Politics,'
Washington Times (July 3, 1997).
---------------------------------------------------------------------------
Ten months later, in May 1998, Speaker Newt Gingrich forced
Chairman Burton to fire Mr. Bossie after the release of the
Hubbell tapes.\114\ At a closed-door meeting of the Republican
Conference at which Chairman Burton refused to apologize for
the release of the tapes, Speaker Gingrich told Chairman
Burton, ``You should be embarrassed.'' \115\
---------------------------------------------------------------------------
\114\ Burton Apologizes to GOP, Washington Post (May 7, 1998).
\115\ Gingrich Blasts Burton in Hubbell Tapes Furor, Roll Call (May
7, 1998).
---------------------------------------------------------------------------
As a result of these mishaps, Speaker Gingrich began to
consider plans to remove the campaign finance investigation
from Chairman Burton's jurisdiction. According to a report in
the Los Angeles Times in May 1998, ``House Republican leaders
decided . . . to shift at least part of the troubled 16-month
investigation of Democratic campaign fund-raising out of the
hands of Rep. Dan Burton (R-Ind.), who has directed an inquiry
beset by partisanship and personal rancor.'' \116\
---------------------------------------------------------------------------
\116\ Gingrich to Place Donor Inquiry in New Hands, Los Angeles
Times (May 14, 1998).
---------------------------------------------------------------------------
Among the options considered were transferring the
investigation to another committee or creating a special select
committee. Roll Call reported at the time that ``[t]he Speaker
is prepared . . . [to move] the multimillion-dollar campaign
probe to the House Oversight Committee.'' \117\ Later it was
reported that Speaker Gingrich ``floated the idea of creating a
special committee to handle the campaign finance
investigation.'' \118\ Ultimately, the Speaker decided to
appoint Rep. Christopher Cox as chairman of the Select
Committee on U.S. National Security and Military/Commercial
Concerns with the People's Republic of China which was
authorized to investigate allegations that the Clinton
administration allowed the transfer of missile technology to
China in exchange for campaign contributions.\119\
---------------------------------------------------------------------------
\117\ House Democrats and Republicans Set for Scandal-Driven,
Contentious Week, Roll Call (May 4, 1998). See also Burton Fires Aid
Over Tapes Fiasco, Washington Times (May 7, 1998).
\118\ Gingrich Discusses Burton Ouster With Gephardt But Chairman
Insists He Still Has Control, Roll Call (May 14, 1998).
\119\ Cox Pledges Small Staff Despite Near-Record Budget
Authorization, The Hill (July 1, 1998).
---------------------------------------------------------------------------
c. the committee abused its powers
Successful congressional investigations have always been
conducted on a fair and bi-partisan basis. The best
investigations have gone to great lengths to involve the
minority and protect the rights of minority members. The House
Watergate investigation, for example, gave both the chairman
and the ranking minority member identical authority regarding
the issuance of subpoenas and the release of documents.\120\
Similarly, in the Iran-Contra investigation, the majority and
minority jointly made all procedural decisions.\121\
---------------------------------------------------------------------------
\120\ H. Res. 803, sec. 2(b), Rpt. 93-774 (Feb. 1, 1974).
\121\ Letter from Rep. Lee H. Hamilton to Rep. Waxman (June 16,
1997).
---------------------------------------------------------------------------
Chairman Burton's campaign finance investigation abandoned
these procedural safeguards and vested unprecedented powers in
Chairman Burton, who, in turn, trampled the rights of
individuals and the minority members. A commentary in the Los
Angeles Times described the conduct of the majority as follows:
In the year or so since the House Government Reform and
Oversight Committee began its wide-ranging probe into
Democratic fund-raising practices . . . [t]hose forced
to appear are grilled in private, sometimes for hours
at a stretch, with few of the protections from
badgering that shield witnesses in the real world. . .
. This would be funny if it were not redolent of a
mentality that Washington has not seen for some
decades. The term `McCarthyism' is used too often and
too loosely, but there are times when it is useful, and
one of those is now.
What made the McCarthy phenomenon so sinister was . . .
several grotesque characteristics of the investigations
themselves. First, the investigations could be
triggered by legal political conduct. Second, they
probed broadly, even indiscriminately, on the ground
that some people actually turn out to be guilty. Third,
anything you said to one investigation could be used
against you in another, creating boundless jeopardy for
anybody questioned. Fourth,merely being investigated
could ruin honest and dishonest alike. All those things are happening
now.\122\
---------------------------------------------------------------------------
\122\ Jonathan Rauch, In the Loop of McCarthyite Investigations,
Los Angeles Times (Mar. 15, 1998).
---------------------------------------------------------------------------
1. The Committee Abused the Subpoena Power
The subpoena power is one of the most coercive powers of
Congress. The issuance of a subpoena compels an individual to
appear before, or submit documents to, a congressional
committee against his or her will. For this reason, the
issuance of a subpoena in past investigations was regarded as a
serious step that was taken only with (1) the concurrence of
the ranking minority member or (2) a committee vote. These
safeguards provided minimal checks and balances that sought to
insure that the subpoena power was not abused for partisan
political advantage. Even when Democratic chairmen had the
power to issue subpoenas unilaterally, they refrained from
exercising this power. In fact, since the McCarthy hearings in
the 1950s, no Democratic chairman of a committee ever issued a
subpoena unilaterally, without either minority consent or a
committee vote.
In the Iran-Contra investigation, for example, Democratic
Chairman Lee Hamilton had the authority to issue subpoenas
after ``consultation'' with the ranking minority member,\123\
but he never used this authority unilaterally. Rep. Hamilton
described the subpoena procedures he used during the Iran-
Contra and other investigations as follows:
---------------------------------------------------------------------------
\123\ House Select Committee to Investigate Covert Arms
Transactions with Iran, Committee rule 4, 100th Cong., 1st Sess.
(1987).
As a matter of practice in the Iran-Contra
investigation, the four Congressional leaders of the
Select Committee--Senators Inouye and Rudman,
Representative Cheney and I--made decisions jointly on
all matters of procedural issues, including the
issuance of subpoenas and the taking of depositions. I
do not recall a single instance in which the majority
acted unilaterally. In fact, I do not recall a single
instance in which our decisions were not unanimous.
With respect to the October Surprise Task Force, I
followed a similar approach with Henry Hyde.\124\
---------------------------------------------------------------------------
\124\ Letter from Rep. Hamilton to Rep. Waxman (June 16, 1997).
This practice of obtaining either minority concurrence or a
committee vote was also followed in the Senate Whitewater
investigation \125\ and the Senate campaign finance
investigation.\126\ It was even followed in the Government
Reform and Oversight Committee during the 104th Congress under
Chairman William Clinger. In a letter to Rep. Cardiss Collins
stating how he intended to interpret the Committee rules,
Chairman Clinger wrote, ``I shall not authorize such subpoenas
without your concurrence or the vote of the committee. I
believe that this new rule memorializes the long-standing
practice of this committee to seek a consensus on the issuance
of a subpoena.'' \127\
---------------------------------------------------------------------------
\125\ S. Res. 20 (May 17, 1995).
\126\ Senate Committee on Governmental Affairs, Investigation of
Illegal or Improper Activities in Connection with 1996 Federal Election
Campaigns, S. Rpt. No. 167, 105th Cong., 2d Sess., v. 6, 8687 (1998)
(hereafter ``Senate Report'').
\127\ Letter from Chairman Clinger to Rep. Cardiss Collins (Mar. 6,
1996). But see Letter from Rep. Cardiss Collins to Chairman Clinger
(Aug. 2, 1996) (Despite this commitment, Chairman Clinger unilaterally
issued four subpoenas relating to the Travel Office-FBI file
acquisition investigation during the August 1996 recess).
---------------------------------------------------------------------------
Chairman Burton, however, shunned this longstanding
precedent. In the Committee rules adopted on February 12, 1997,
and in the investigation's document protocol adopted on April
10, 1997, Chairman Burton sought and obtained the power to
issue subpoenas unilaterally, without minority consent or a
Committee vote.128 He then proceeded to issue 758
unilateral subpoenas. These subpoenas were for both documents
(684 subpoenas) and witnesses (74 subpoenas).
---------------------------------------------------------------------------
\128\ Committee rule 18(d) and Document Protocol Sec. A.2(a) (Apr.
10, 1997).
---------------------------------------------------------------------------
Near the end of the investigation, after the minority
members refused to support additional immunity requests without
procedural reforms, the Committee's document protocol was
amended to provide for a vote of a five-member working group,
consisting of three Republicans and two Democrats, in the event
that the minority objected to the issuance of a
subpoena.129 Even this limited safeguard, however,
was shown to be a sham procedure when Chairman Burton denied
the minority an opportunity to present its objections to each
of the majority members before seeking working group approval
for a subpoena to Attorney General Reno.130
---------------------------------------------------------------------------
\129\ Committee Document Protocol Sec. A.2(a) (June 23, 1998).
\130\ Letter from Rep. Waxman to Chairman Burton (Aug. 24, 1998).
---------------------------------------------------------------------------
Chairman Burton's unilateral subpoena power led to many
abuses. As discussed above, he issued subpoenas to the wrong
witnesses. He also issued many subpoenas that did not meet the
requirements of relevancy, admissibility, and specificity that
apply in a judicial context. Forexample, Chairman Burton
subpoenaed all DNC records relating to its senior staff.\131\ This
request covered matters relating to the DNC's internal budgeting,
campaign strategies, and political activities unrelated to fundraising.
The subpoena also demanded all DNC records relating to high-level White
House contact with the DNC and all DNC phone records from January 20,
1993, forward without limiting the request to fundraising.
---------------------------------------------------------------------------
\131\ Subpoena from House Committee on Government Reform and
Oversight to the Democratic National Committee (Mar. 4, 1997).
---------------------------------------------------------------------------
Chairman Burton also issued a broad subpoena to the White
House for all phone records from Air Force I and Air Force II
and all records of visitors to the White House residence since
1993, among other things.\132\ The subpoena was issued without
regard for its impact on national security or the Clinton
family's privacy. For example, the request for all visitors to
the White House made no exception for Chelsea Clinton's
friends, relatives of the First Family, or visits by doctors or
clergy.
---------------------------------------------------------------------------
\132\ Subpoena from House Committee on Government Reform and
Oversight to the Executive Office of the President (Mar. 4, 1997).
---------------------------------------------------------------------------
In another example, Chairman Burton abused the subpoena
power by ordering a private citizen to violate the law.
Chairman Burton subpoenaed accountant Donald Lam for all tax
preparation material related to Ted Sioeng, his family, or
their businesses.\133\ Mr. Sioeng objected to disclosure of
this information. As a result of the client's objection,
federal law prevented Mr. Lam from providing the material
without a court order.\134\ Specifically, 26 U.S.C. Sec. 7216
prohibits someone ``engaged in the business of preparing . . .
[tax] returns'' from ``disclos[ing] any information furnished
to him for, or in connection with, the preparation of any such
return.'' Violating the statute subjects the accountant to
criminal penalties including a fine and imprisonment.
---------------------------------------------------------------------------
\133\ Subpoena from House Committee on Government Reform and
Oversight to Donald Lam (Jan. 30, 1998).
\134\ Letter from Mark MacDougall, et al., to Chairman Burton (Feb.
13, 1998).
---------------------------------------------------------------------------
Notwithstanding Mr. Lam's obligations under federal law,
Chairman Burton ruled in a February 20, 1998, letter that Mr.
Lam must provide the information to the Committee or risk being
held in contempt of Congress.\135\ Not only did this action
unilaterally compel a private citizen to commit a federal
crime, it also circumvented 26 U.S.C. Sec. 6103, which provides
that tax records can be obtained only by the House Ways and
Means Committee, the Senate Finance Committee, or the Joint
Committee on Taxation, absent special authorization from the
House. In effect, Mr. Lam was put in the position of having to
choose between violating the tax code, which would subject him
to a possible fine or imprisonment, or facing congressional
contempt.\136\
---------------------------------------------------------------------------
\135\ Letter from Chairman Burton to Steven R. Ross, et al. (Feb.
20, 1998).
\136\ Letter from Rep. Waxman to Chairman Burton (Feb. 27, 1998).
---------------------------------------------------------------------------
Unfortunately, Mr. Lam was not the only accountant to be
subpoenaed for tax preparation materials. Chairman Burton also
subpoenaed Michael C. Schaufele for tax preparation materials
related to Webster Hubbell.\137\
---------------------------------------------------------------------------
\137\ See Subpoena from House Committee on Government Reform and
Oversight to Michael Schaufele (Feb. 4. 1998).
---------------------------------------------------------------------------
In contrast to Chairman Burton's approach, former House
Commerce Committee Chairman John Dingell followed the proper
course in attempting to obtain tax records of junk bond
financier Michael Milken during a 1990 investigation of Mr.
Milken and his firm, Drexel Burnham Lambert. Once it was
determined that a request for these records would violate 26
U.S.C. Sec. 7216, Chairman Dingell applied to the court for an
order to obtain the documents.\138\
---------------------------------------------------------------------------
\138\ See Application for Order for Providing Tax Preparer
Information, Misc. No. 90-231 (D.D.C. Aug. 14, 1990).
---------------------------------------------------------------------------
Chairman Burton also unilaterally issued subpoenas that
appeared to be politically motivated and were unrelated to the
campaign finance investigation, including a number of requests
related to the matter of the President's relationship with
Monica Lewinsky. For example, Chairman Burton subpoenaed the
Investigative Group, Inc. (IGI), the company run by long-time
Washington detective Terry Lenzner, for any documents relating
to Independent Counsel Kenneth Starr's investigation or members
of Congress.\139\ According to George:
---------------------------------------------------------------------------
\139\ Subpoena from House Committee on Government Reform and
Oversight to Investigative Group, Inc. (Mar. 30, 1998).
Burton assumed he would be handed a treasure trove of
documents that would embarrass the Democrats. But when
Lenzner and his lawyers searched their files, they made
a startling discovery: The investigator known for
digging dirt for Clinton had actually done more
snooping for Republicans than Democrats. When Lenzner's
lawyers made that fact known to Burton's staff, the
request was quickly withdrawn.\140\
---------------------------------------------------------------------------
\140\ George Magazine (Aug. 1998). In addition to subpoenas,
Chairman Burton also sent interrogatories related to the Lewinsky
matter. For example, on Apr. 1, 1998, Chairman Burton sent
interrogatories to Democratic fundraiser Nathan Landow. The
interrogatories were issued only after the press reported that Kathleen
Willey, who accused President Clinton of making an unwanted sexual
advance, alleged that Mr. Landow tried to influence her testimony in
the Paula Jones lawsuit. Although Chairman Burton said he would not
investigate the President's sexual conduct, request 27 of the
interrogatories asked Mr. Landow to ``[d]escribe any conversation or
contact you have knowledge of regarding making a suggestion to any
potential witness before . . . a grand jury or other legal
proceeding.'' Chairman Burton also sent interrogatories to the White
House for information about its assertions of executive privilege in
the Lewinsky matter, the White House Counsel's office debriefings of
witnesses appearing before Mr. Starr's grand jury, and information
about White House attorney work-product that was shared with the
President's personal attorney in the Jones and Lewinsky matters.
Chairman Burton also subpoenaed the White House for all
records relating to the White House Counsel's office and First
Lady Hillary Rodham Clinton concerning the acquisition of FBI
background files by the White House.\141\ This subpoena was
issued despite the fact that the FBI file issue was thoroughly
investigated by the Committee during the 104th Congress.\142\
---------------------------------------------------------------------------
\141\ Subpoena from House Committee on Government Reform and
Oversight to the Executive Office of the President (Jan. 28, 1998).
\142\ House Committee on Government Reform and Oversight,
Investigation Into the White House and Department of Justice on
Security of FBI Background Investigation Files, H. Rpt. No. 104-862,
104th Cong., 2d Sess. (1996).
---------------------------------------------------------------------------
2. The Committee Abused the Deposition Power
In June 1997, the House voted along party lines to give
Chairman Burton authority to conduct staff depositions for the
campaign finance investigation.\143\ This special power is
granted only rarely by the House. According to the House Rules
Committee, the House is ``generally reluctant to report
resolutions granting staff deposition authority . . . and
believes that such special investigative authority should not
be necessary.''\144\ In fact, the only previous time that this
power was granted to this Committee was in the 104th Congress
to conduct the travel office and FBI file investigations.
---------------------------------------------------------------------------
\143\ See H. Res. 167, sec. 3, H. Rpt. 105-139 (June 20, 1997).
\144\ House Committee on Rules, Providing Special Authorities to
the Committee on Government Reform and Oversight to Obtain Testimony on
the White House Travel Office Matter, H. Rpt. No 104-472, 104th Cong.,
2d Sess., 10 (1996).
---------------------------------------------------------------------------
The deposition power is disfavored because it delegates
from the Committee members to staff the power to gather
testimony, under oath, outside the public's view. According to
the Rules Committee, the normal hearing procedure, which
requires two members to be present to take sworn testimony, was
adopted to `` `abolish[] the custom of one-man subcommittees'--
one of the major abuses of the McCarthy era.'' \145\
---------------------------------------------------------------------------
\145\ Id. at 7.
---------------------------------------------------------------------------
After receiving deposition authority, the Committee deposed
161 people--over more than 650 hours--in connection with this
investigation. Of these 161 individuals, only 15 were ever
called to testify at a hearing. Most of the depositions were
used by Committee staff to conduct a wide-ranging fishing
expedition rather than to pursue legitimate investigative
leads. Only two of these witnesses were deposed to investigate
Republican fundraising abuses.
These depositions were extremely burdensome on individuals.
Legal representation for a deponent often costs over $300 per
hour. It is estimated that costs incurred for a deponent,
including time spent traveling, missed work, preparation time,
and legal representation averages $10,000 for a day of
deposition testimony. According to the attorney for one life-
long government employee, this individual alone incurred
$50,000 in legal bills related to congressional
investigations.\146\ Even an unpaid White House intern was
forced to obtain an attorney to represent her at a deposition
relating to the White House Database (WhoDB).\147\
---------------------------------------------------------------------------
\146\ Minority conversation with Martin Lobel, attorney for Export-
Import Bank Director Maria Haley (Oct. 16, 1997).
\147\ Deposition of Jacqueline Bellanti, 62-63 (Oct. 7, 1998).
---------------------------------------------------------------------------
The resolution giving the Committee deposition power, H.
Res. 167, authorized the Committee to take depositions to
investigate ``political fundraising improprieties and possible
violations of law.''\148\ Over the objections of the minority,
however, Chairman Burton's staff repeatedly pursued questions
that did not fall within this scope. The overall approach of
the majority with respect to the scope of the depositions was
best summarized by one attorney working for the majority, who
told the minority staff that they had been instructed to ``blow
off'' minority objections to questions because witnesses will
almost always answer questions in order to finish the
deposition.\149\ In the Charles Duncan deposition, majority
counsel even asserted that H. Res. 167 should ``be read in the
disjunctive,'' thereby authorizing the majority to investigate
any ``possible violation of law'' regardless of its
relationship with political fundraising.\150\
---------------------------------------------------------------------------
\148\ H. Res. 167, sec. 1 and sec. 3(1) (June 20, 1997).
\149\ Letter from Rep. Waxman to Chairman Burton (Sept. 10, 1997).
\150\ Deposition of Charles Duncan, 8 (Aug. 29, 1997).
---------------------------------------------------------------------------
Throughout the investigation, Committee depositions were
conducted haphazardly, without any discernible investigative
strategy or plan. In the first three months that depositions
were taken,the majority asked questions on over 36 unrelated
topics.151 To take one example of how far afield the
depositions strayed, Dick Morris was asked under oath, ``Did there come
a time when Mr. Stephanopoulus told you about the discovery of life on
Mars?'' 152 On several occasions, the majority staff asked
deponents for information about their private lives: A former White
House intern was asked the name of his girlfriend; 153 one
White House employee was asked, ``Did you ever receive a drug test?';
154 and another former White House staffer was asked what
type of car she drives.155
---------------------------------------------------------------------------
\151\ See letter from Rep. Waxman to Chairman Burton (Sept. 10,
1997).
\152\ Deposition of Dick Morris, 174 (Aug. 21, 1997).
\153\ Letter from Rep. Waxman to Chairman Burton (Sept. 10, 1997).
\154\ Deposition of Karen Hancox, 17 (Aug. 28, 1997).
\155\ Deposition of Janice Enright, 58 (Aug. 19, 1997).
---------------------------------------------------------------------------
Other witnesses were unfairly harassed during their
depositions. George Skibine, for example, is a 17-year career
civil servant at the Department of the Interior. The majority
insisted on forcing Mr. Skibine to sit through two days of
deposition testimony even though he had been previously deposed
by the Senate on the same topic and is a diabetic who needs to
monitor his insulin carefully. At one point during the
deposition, Rep. Horn even accused Mr. Skibine of providing
false testimony because he did not like the answers Mr. Skibine
was providing, stating: ``Isn't it a fact that no matter what
question we raise, we're wasting our time because you were
given an order as to how to come out on this?'' 156
---------------------------------------------------------------------------
\156\ Deposition of George Skibine, 164 (Jan. 13, 1998).
---------------------------------------------------------------------------
Another deponent, Charles Intriago, was forced to travel
from Miami to Washington, at taxpayers expense, even after his
attorney informed the Committee that Mr. Intriago would assert
his Fifth Amendment privilege and not testify. Although Mr.
Intriago was concerned about testifying because it had recently
been reported in at least two major newspapers that Mr.
Intriago was under investigation by the Department of
Justice,157 the majority responded that Mr. Intriago
did not need to assert his Fifth Amendment privilege because
the applicable statute of limitations had run. The majority
also threatened to hold Mr. Intriago in contempt if he chose to
assert his constitutional right.158 This advice was
termed ``ludicrous at best'' by Steve Ryan, a professor at
Georgetown University Law Center who teaches a course on
congressional investigations.159 It also conflicted
with a D.C. Bar Association ethics opinion, which advises that
it is unethical for congressional counsel to require a witness
to appear after being advised that the witness will invoke a
Fifth Amendment privilege.160 A Department of
Justice regulation establishes a similar standard for federal
prosecutors.161
---------------------------------------------------------------------------
\157\ Letter from Robert Plotkin to Majority Counsel Richard
Bennett (Feb. 18, 1998).
\158\ Id.
\159\ Burton Team Threatens Contempt for Witness, The Hill (Feb.
25, 1998).
\160\ District of Columbia Bar Association Ethics Opinion No. 31
(Mar. 29, 1977).
\161\ Letter from Robert Plotkin to Richard Bennett (Feb. 18,
1998).
---------------------------------------------------------------------------
The majority's actions relating to the deposition of Marsha
Scott also typify the unreasonable and harassing approach
employed by the majority staff.162 Ms. Scott is the
deputy director of the White House Office of Personnel. She was
a cooperative witness, and she had never been accused of
wrongdoing. Nevertheless, Ms. Scott was forced to provide three
days of deposition testimony over 18 hours before the Senate,
and an additional five days of deposition testimony over 20
more hours before this Committee.163 Despite these
eight days of deposition testimony, Ms. Scott was never called
as a substantive witness at a hearing and had little
information relevant to the Committee's investigation.
---------------------------------------------------------------------------
\162\ See Letters from Rep. Waxman to Chairman Burton (Apr. 1,
1998, and Apr. 3, 1998).
\163\ At one point, counsel for Ms. Scott tried to protect his
client from further harassment by the Committee. After three days of
deposition testimony, the majority staff insisted that Ms. Scott appear
for a fourth day to answer questions about her conversations with the
White House Counsel's office about a memorandum she had written which
she had originally declined to answer out of concerns about the
attorney-client privilege. Ms. Scott's attorney suggested that Ms.
Scott provide the Committee with a sworn affidavit about that
conversation. The majority staff rejected this offer and insisted that
she appear for more testimony.
Since Ms. Scott had already provided three days of testimony, Ms.
Scott's attorney attempted to restrict the additional testimony to
questions about the conversations regarding the memo. At the
deposition, taken on Apr. 1, 1998, the majority began asking questions
on other topics. In response, her attorney stated, ``This harassment is
going to end. . . . If you do not have more questions about the
substance and the conversations--about the substance of the June memo,
then we are going to leave.'' After responding to a number of
additional questions unrelated to the privilege issue, the attorney
advised Ms. Scott to end the deposition.
Hours later, National Economic Growth, Natural Resources, and
Regulatory Affairs Subcommittee Chairman David McIntosh called a
hearing for 8:00 p.m. that night, and Chairman Burton subpoenaed Ms.
Scott to testify. This action violated Committee rules and precedent.
The Committee's document protocol required 24-hours notice to the
minority before the chairman can issue a subpoena, absent exigent
circumstances that did not apply in that case. Furthermore, House and
Committee rules require the majority to give the minority seven days
notice of hearings. This rule can be waived by the Committee only for
``good cause.'' This provision, however, was never used before in the
Government Reform and Oversight Committee without the consent of the
minority. Letter from Rep. Waxman to Chairman Burton (Apr. 3, 1998).
---------------------------------------------------------------------------
The procedures adopted by the Committee for the taking of
depositions effectively prevented the minority from any
meaningful participation. The rules allowed the majority ``as
much time as is necessary to ask all pending questions'' before
the minority had an opportunity to ask its first
question.164 The practical effect of this rule was
that the majority asked hours--if not days--of questions before
the minority was allowed to ask questions. Former DNC finance
director Richard Sullivan, for example, was deposed by the
majority for 18 hours over four days before the minority was
allowed to ask its first round of questions.165
---------------------------------------------------------------------------
\164\ Committee Rule 20 (Apr. 10, 1997). This rule differed
dramatically from the rule used by the Committee during the 104th
Congress. During the Travel Office-FBI File investigation, questioning
was conducted in one-hour rounds, alternating between the majority and
the minority, until both sides gathered the necessary information. See
Committee Rule 19(e) (104th Cong). At the June 23, 1998, Committee
meeting, Chairman Burton agreed to amend this rule to provide for
alternating one-hour rounds of questions as part of a compromise to get
minority support for immunity for four witnesses. This change, however,
did not occur until after the Committee had already taken 153
depositions.
\165\ Deposition of Richard Sullivan (Mar. 5, 1998).
---------------------------------------------------------------------------
3. The Committee Abused the Immunity Power
A grant of immunity is one of the most significant actions
an investigative committee can take. Since immunity shields the
witness from criminal prosecution, it is ordinarily given only
for testimony that is accurate and important and that cannot be
secured through other means. The committee proposing immunity
also usually takes prudent steps to insure that the witness
being granted immunity does not take an ``immunity bath'' to
protect him or herself from prosecution for unrelated offenses.
Unfortunately, the majority did not take such precautions.
At the first campaign finance hearing on October 9, 1997, the
Committee heard testimony from David Wang. The majority had
requested that the minority join with them to vote to give Mr.
Wang immunity for his testimony about illegal conduit
contributions. The minority agreed--only to find out that the
majority had obtained unreliable testimony and given a witness
inappropriate immunity.
Mr. Wang testified that John Huang visited him at his place
of business in Los Angeles on August 16, 1996, to solicit
campaign contributions for the DNC. Mr. Wang testified that Mr.
Huang indicated that he would be reimbursed for his
contribution. Mr. Wang proceeded to write two $5,000 checks on
behalf of himself and his friend, Daniel Wu.166
---------------------------------------------------------------------------
\166\ House Committee on Government Reform and Oversight, Hearings
on Conduit Payments to the Democratic National Committee, 105th
Congress, 1st Sess. 272 (Oct. 9, 1997).
---------------------------------------------------------------------------
This testimony was demonstrably inaccurate. At the hearing,
the minority released a staff report which detailed documentary
evidence that ``the meeting that Mr. Wang testified about could
not have occurred because John Huang was in New York City--not
Los Angeles--from at least August 15, 1996 through at least
August 18, 1996.'' 167 The evidence included Mr.
Huang's hotel receipts, eyewitness statements, and news
reports.
---------------------------------------------------------------------------
\167\ Id. at 306-356 (Minority Staff Report entitled Evidence that
John Huang Was in New York City on August 15, 16, 17, and 18 (Oct. 9,
1997)).
---------------------------------------------------------------------------
Not only was Mr. Wang's testimony inaccurate, the majority
also failed to properly investigate Mr. Wang's other activities
before proposing that he be given immunity. The result was a
major embarrassment for the Committee: Mr. Wang received
immunity for potentially serious immigration and tax violations
unrelated to the campaign finance investigation that were
unknown to members of the Committee.168
---------------------------------------------------------------------------
\168\ See letter from Rep. Waxman to Attorney General Janet Reno
(Oct. 20, 1997).
---------------------------------------------------------------------------
At his deposition, Mr. Wang testified that he had power of
attorney over the bank account of Daniel Wu, a U.S. green card
holder and businessman who resides in Taiwan. According to Mr.
Wang, two companies--Ji Tai International and Bao Li Hang
International--wrote payroll checks to Mr. Wu each month, which
Mr. Wang deposited into Mr. Wu's account. Mr. Wang testified
that he then wrote checks back to those companies in the same
amounts as the payroll checks.169 Mr. Wang
explained, ``The reason being that for immigration purposes, it
would show that Mr. Wu was here in the States physically. . . .
And on the part of the two companies, it was to show they had
an employee on the payroll which might give them a tax credit
or a tax break. So it was for tax purposes.'' 170
---------------------------------------------------------------------------
\169\ Deposition of David Wang, 72-76 (Oct. 6, 1997).
\170\ Id. at 94.
---------------------------------------------------------------------------
These actions may have violated several federal statutes.
If false statements were made to the INS about Mr. Wu's
residency, these would appear to violate 18 U.S.C.
Sec. Sec. 1001, 1015. If the two companies named by Mr. Wu
evaded or attempted to evade paying taxes, this would appear to
violate 26 U.S.C. Sec. Sec. 7206, 7215. Moreover, if the
companies, Mr. Wu, and Mr. Wang conspired to commit these
violations, as suggested by Mr. Wang's testimony, this would
appear to be an illegal conspiracy under 18 U.S.C. Sec. 371.
The result of the grant of immunity is that Mr. Wang cannot be
prosecuted for this potentially fraudulent activity, even
though it is unrelated to the campaign finance investigation.
4. The Committee Abused the Contempt Power
The contempt power is the most potent and rarely invoked
authority of Congress. Under thispower, Congress can punish an
individual for failure to cooperate or comply with a compulsory
directive with imprisonment of up to one year.171
---------------------------------------------------------------------------
\171\ 2 U.S.C. Sec. Sec. 192, 194.
---------------------------------------------------------------------------
On August 6, 1998, the Committee voted along party lines
(24 to 19) to cite Attorney General Janet Reno for contempt of
Congress. As described in detail in the minority views filed
with the Committee's contempt report, this action constituted
an abuse of the contempt power.172
There was no reasonable basis for proceeding with the
contempt citation. The Attorney General was cited for contempt
because she did not give the Committee two memoranda written by
Louis B. Freeh, the Director of the FBI, and Charles G. La
Bella, the former head of the Department of Justice's
investigative task force on campaign finance. These memoranda
contained prosecution recommendations and other sensitive and
detailed information regarding the Department's largest ongoing
criminal investigation. The Attorney General's refusal to turn
over this information was consistent with 100 years of
precedent in which both Republican and Democratic
administrations have refused to provide Congress with
prosecution memoranda in ongoing criminal investigations. The
Committee's contempt vote occurred just two days after Director
Freeh, Mr. La Bella, and the lead FBI agent in the
investigation, James V. Desarno, Jr., testified that releasing
the memoranda would provide a ``road map'' of the investigation
to criminal defendants and would be ``devastating'' to future
prosecutions.
---------------------------------------------------------------------------
\172\ House Committee on Government Reform and Oversight, Contempt
of Congress, H. Rpt. No. 105-728, 105th Cong., 2d Sess., 134-135
(1998).
---------------------------------------------------------------------------
The Attorney General made every effort to reach an
accommodation with the Committee, including offering to brief
the Chairman and Ranking Minority Member on the contents of the
memoranda and testify before the full Committee at a public
hearing. She requested only that before taking these steps, she
be given three weeks to complete her review of the memorandum
and make her decisions free of political influence. The
Chairman rejected every attempt at accommodation.
The Committee proceeded with the contempt citation in an
apparent effort to intimidate the Attorney General. The goal
appeared to be to force the Attorney General to choose between
seeking the appointment of an independent counsel to
investigate the President or going to prison for contempt of
Congress. In fact, in a meeting with the Attorney General in
his office on July 31, 1998, Chairman Burton explicitly told
the Attorney General that he would not insist on seeing the
memoranda and would not seek a House vote on contempt if the
Attorney General decided to seek appointment of an Independent
Counsel.173 Chairman Burton's spokesman confirmed
this when he told the Washington Post, ``[T]he only one real
objective here is getting an independent counsel. . . . If she
follows that advice, there will be no need for the documents.''
174 As the Washington Post wrote in an editorial
after the Committee vote, ``Mr. Burton's approach to the matter
has been nothing less than thuggish. . . . [Ms. Reno] is right
in her refusal to be bullied.'' 175
---------------------------------------------------------------------------
\173\ Letter from Rep. Waxman to Attorney General Reno (July 31,
1998).
\174\ Democrats Say Burton Made Threat Against Reno, Washington
Post (Aug. 1, 1998).
\175\ Mr. Burton and Ms. Reno, Washington Post (Aug. 7, 1998).
---------------------------------------------------------------------------
After the immunity vote, Attorney General Reno continued to
make every effort to accommodate Chairman Burton. On August 24,
1998, for example, the Department of Justice offered to conduct
a staff briefing on the memoranda for Chairman Burton. Chairman
Burton responded that this was a ``disingenuous offer.''
176 Then, at the suggestion of House Judiciary
Committee Chairman Henry Hyde,177 Attorney General
Reno allowed Chairman Burton ``and a few other senior lawmakers
in the House and Senate . . . to read edited copies of the
reports.'' 178 In a further attempt to reach a
compromise, Attorney General Reno agreed to allow a small
delegation of Committee members to review the memoranda
provided that Chairman Burton withdraw his contempt
threat.179 Chairman Burton refused and proceeded to
file the Committee's contempt resolution with the
House.180
---------------------------------------------------------------------------
\176\ Letter from Chairman Burton to Attorney General Reno (Aug.
24, 1998).
\177\ Letter from Chairman Hyde to Attorney General Reno (Aug. 27,
1998).
\178\ Lawmaker Seeks Vote on Contempt Resolution Against Reno, New
York Times (Sept. 18, 1998).
\179\ Id.
\180\ Burton Wants House to Find Reno in Contempt, Washington Post
(Sept. 18, 1998).
---------------------------------------------------------------------------
Chairman Burton's efforts to hold the Attorney General in
contempt were widely criticized. The following are a few
excerpts from newspaper editorials across the country:
The Contempt Citation, Washington Post (Sept.
22, 1998): ``It is bad enough that Mr. Burton has
extorted from the attorney general a look at even an
edited version of a prosecutor's thoughts on an ongoing
criminal investigation. But his continuing to push this
matter after Ms. Reno has obliged him as she has is a
gross abuse of his powers as chairman of the committee.
. . . [I]t reflects poorly on the leadership that it is
even tolerating Mr. Burton's antics.''
Buck Stops With Reno, Los Angeles Times (Aug.
6, 1998): ``Congress has no business threatening Reno
with contempt charges. . . . [T]he panel should reject
the request if Burton insists on putting the issue to a
vote today. Better yet would be for Burton to
acknowledge the idea is wrongheaded and drop it
altogether.''
Tell Him No, Ms. Reno! Don't Yield to Burton,
Miami Herald (Aug. 6, 1998): ``If you want to rid your
house of rats, one extremely effective way is to burn
down the house. That's essentially what U.S. Rep. Dan
Burton . . . seems willing to do by threatening
Attorney General Janet Reno with contempt of Congress.
. . . Mr. Burton's request is dangerous. It's more than
laced with his palpable political motives. Worse, it's
also bereft of any sign that he has weighed what these
memos, if leaked, could do to the Department of
Justice's own investigation.''
The Foolish Threat Against Reno, Chicago
Tribune (Aug. 6, 1998): ``Given their professed desire
to see that the law is enforced, you would think Burton
and his GOP colleagues would be leery of any step that
might hinder prosecutors. The threat of contempt
citation makes sense only if their real purpose is to
embarrass the administration.''
Do It Justice, New York Newsday (Aug. 6,
1998): ``[N]obody deserves the kind of treatment Reno
has been getting from Rep. Dan Burton. . . . Burton
should back off.''
Give Reno Some Room, St. Petersburg Times
(Aug. 6, 1998): ``The integrity of the investigations
is more important than a few congressional Republicans
grabbing some headlines. Burton should stop this
showboating and follow the lead of his more temperate
colleagues.''
5. The Committee Abused the Power to Release Documents
As in the case of subpoena authority, past congressional
investigations have prohibited a committee chairman from
unilaterally releasing documents. In some investigations,
documents could be released only during committee meetings and
hearings. In other investigations, documents could not be
released without the concurrence of the ranking minority member
or a vote of the committee. These procedures provided a minimal
check on the power of any individual to release potentially
confidential documents.
The resolution authorizing the House Watergate
investigation, for example, stated that ``[n]o member shall
make any of that testimony or those papers or things [obtained
by the committee] public unless authorized by a majority vote
of the committee.'' 181 The rules of the Senate
Whitewater investigation similarly provided that ``[n]o member
of the special committee or the staff . . . shall disclose . .
. any confidential materials or information, unless authorized
by the special committee or the chairman in concurrence with
the ranking member.'' 182 The Iran-Contra
investigation rules provided that ``[u]nless otherwise directed
by the committee, all depositions, affidavits, and other
materials received in the investigation shall be considered
nonpublic. . . . All such material shall, unless otherwise
directed by the committee, be available for use by the members
of the select committee in open session.'' 183
---------------------------------------------------------------------------
\181\ House Committee on the Judiciary, Procedures for Handling
Impeachment Inquiry Material, 93d Cong., 2d Sess. (Feb. 1974).
\182\ S. Res. 120, Sec. 6 (May 17, 1995).
\183\ House Select Committee to Investigate Covert Arms
Transactions with Iran, Rule 7.6, 100th Cong., 1st Sess. (Feb. 1974).
---------------------------------------------------------------------------
These practices notwithstanding, the Committee adopted a
document protocol on April 10, 1997, that gave the chairman
unilateral ``discretion'' to release the documents, including
privileged and confidential documents, ``to the media . . . or
to any other person'' without the prior consent of the
Committee or the ranking minority member.184 A
former Republican staff member called the document protocol
``unprecedented.'' 185
---------------------------------------------------------------------------
\184\ Protocol for Documents, Clause C (Apr. 10, 1997).
\185\ Burton's Proposed Rules on Probe Documents Criticized,
National Journal's Congress Daily (Apr. 3, 1997).
---------------------------------------------------------------------------
The protocol established a working group to advise the
chairman in cases where the minority objected to the public
release of certain documents. In these situations, ``the
Chairman shall present the matter to the Working Group for non-
binding decision regarding the advisability of the proposed
release.'' 186 The chairman, however, retained the
authority to release these documents without the consent of the
minority or the working group.
---------------------------------------------------------------------------
\186\ Protocol for Documents, Clause C(b) (Apr. 10, 1997).
---------------------------------------------------------------------------
Chairman Burton and his staff abused this authority to
release Committee documents to the press. The most egregious
example of Chairman Burton's unilateral power to release
documents was the Chairman's release of subpoenaed Bureau of
Prisons tape recordings of Webster Hubbell's phone
conversations with his wife.187
---------------------------------------------------------------------------
\187\ Subpoena from House Committee on Government Reform and
Oversight to Federal Prison Camp, Cumberland, Maryland (May 8, 1997).
---------------------------------------------------------------------------
The first release of the Hubbell tapes occurred when the
Wall Street Journal was given access to these private telephone
calls for an article that was published on March 19,
1998.188 In a letter to Rep. Waxman, Chairman Burton
stated that the tapes were given to the Journal because the
tapes ``were considered relevant'' to the Committee's
investigation.189 Chairman Burton also acknowledged
that he was the source of the release, arguing that the tapes
``were entered into the Committee record on December 10,
1997.''190 These tapes, however, were never publicly
released at that hearing or any other,191 and they
did not relate to the campaign finance investigation. The tape
described in the Wall Street Journal article concerned what
Mrs. Hubbell should cook her family for dinner. The sole effect
of releasing the recordings of these private conversations was
to embarrass and demean Mr. Hubbell.
---------------------------------------------------------------------------
\188\ As He Wasted Away, the Prisoner Had But One Thing on His
Mind, Wall Street Journal (Mar. 19, 1998).
\189\ Letter from Chairman Burton to Rep. Waxman (Mar. 27, 1998).
\190\ Id.
\191\ See letter from Reps. Waxman and Lantos to Chairman Burton
(Apr. 27, 1998).
---------------------------------------------------------------------------
Chairman Burton released additional transcripts of the
Hubbell tapes on April 30, 1998. Although the minority objected
in advance to this release, Chairman Burton did not even
convene the working group to consider the minority's objections
in violation of his own document protocol.192 As
discussed above, the transcripts released by Chairman Burton
were selectively edited to remove exculpatory passages.
---------------------------------------------------------------------------
\192\ Letter from Rep. Waxman to Chairman Burton (May 3, 1998).
---------------------------------------------------------------------------
In another example, on February 27, 1998, Chairman Burton
released his staff's notes of an interview with Steven Clemons,
a former aide to Senator Bingaman, related to Charlie Trie's
involvement with a trade commission. Chairman Burton released
the notes even though he was forced to cancel a scheduled
hearing on the topic after Senate Majority Leader Trent Lott
and Minority Leader Tom Daschle objected that Mr. Clemons's
testimony would jeopardize the Senate's independence. Not only
did the release of the notes disregard the Senate's concerns
about Mr. Clemons's testimony,193 Mr. Clemons
himself disputed the accuracy of the staff notes and claimed
they did not represent his views.194
---------------------------------------------------------------------------
\193\ Letter from Rep. Waxman to House Speaker Newt Gingrich (Feb.
27, 1998).
\194\ Statement of Steven C. Clemons (Feb. 25, 1998).
---------------------------------------------------------------------------
After months of minority protests about these unilateral
powers and the subsequent abuses, Chairman Burton finally
agreed to revise the Committee rules and document protocol
regarding the release of documents, issuance of subpoenas, and
rounds of questioning in depositions.195 Under the
revisions, the Chairman could no longer release documents
unilaterally but needed to obtain either the concurrence of the
ranking minority member or a vote of the Committee. The new
protocol also required the Chairman to notify the minority at
least 24 hours before the intended release in order to give the
minority adequate opportunity to review the documents and make
an objection.196 These concessions were made only
after the minority refused to agree to grant immunity to
witnesses without reforms to the Committee's procedures.
---------------------------------------------------------------------------
\195\ Letter from Chairman Burton to Rep. Waxman (June 18, 1998).
\196\ Document Protocol, Sec. C.3 (June 23, 1998).
---------------------------------------------------------------------------
At the June 23, 1998, meeting at which the revisions were
adopted, Chairman Burton assured the minority that the new
rules were ``not cosmetic changes.''197 Despite that
assurance, Chairman Burton continued to release documents
without regard to the new rules. At the August 4, 1998,
Committee hearing, Chairman Burton made a motion to release
certain documents even though the minority was not notified of
the proposed release until after 3:00 p.m. on August 3--less
than 24 hours earlier. Furthermore, at no time did Chairman
Burton attempt to reach consensus with the minority on the
document release.198
---------------------------------------------------------------------------
\197\ Chairman Burton, Committee Meeting (June 23, 1998).
\198\ Letter from Rep. Waxman to Chairman Burton (Aug. 24, 1998).
---------------------------------------------------------------------------
The Committee also released confidential documents over the
objections of law enforcement and other executive agencies. On
September 2, 1998, the Committee released the deposition of
Larry Wong without first redacting confidential FBI and
Commerce Department Inspector General materials included in the
deposition transcript.199 The minority was not
consulted nor given an opportunity to review the majority's
redactions prior to the release.200 The information
included memos written by FBI agents summing up information
provided to the FBI from confidential sources and a report by
agents in the Commerce Department Inspector General's office
summarizing a confidential witness interview in an active
investigation. The FBI had requested that ``[o]ut of a concern
for the privacy interests of those individuals mentioned in
these documents and the sensitive nature of the information
involved, we request that the Committee confer with us prior to
publicly disseminating any of this material.'' 201
The Commerce Department made a similar request.202
Nevertheless, the material was included as an exhibit to the
deposition and sensitive portions were read into the record and
published on the majority's Internet site.
---------------------------------------------------------------------------
\199\ Letter from Rep. Waxman to Chairman Burton (Sept. 9, 1998).
\200\ Id.
\201\ Letter from FBI Assistant Director John E. Collingwood to
Chairman Burton (Jan. 17, 1998).
\202\ Letter from Commerce Department Inspector General Francis D.
DeGeorge to Chairman Burton (Sept. 12, 1997).
---------------------------------------------------------------------------
Similarly, the Committee also ignored the Department of
Justice's objection to the release of documents relating to
travelers checks from Charlie Trie, which were the subject of
an ongoing criminal investigation. In a July 30, 1998, letter
to Chairman Burton, Deputy Assistant Attorney General Mark M.
Richard wrote:
Certain facts surrounding the travelers checks are
under active investigation and are crucial to our
determination whether additional crimes are charged.
The FBI is pursuing leads both here and abroad. Release
of the checks now would inevitably compromise our
ability to develop new evidence by alerting witnesses
and conspirators about the nature and direction of the
investigation. (Indeed, because of these concerns the
checks have not yet been released to the defendant in
the Trie case.) 203
---------------------------------------------------------------------------
\203\ Letter from Mark M. Richard to Chairman Burton (July 30,
1998).
Despite these concerns, on August 4, 1998, the majority
voted at a Committee meeting to release the travelers checks,
leading to exactly the type of press coverage that the Justice
Department hoped to avoid.204
---------------------------------------------------------------------------
\204\ After the release of the travelers checks, several stories
appeared in major newspaper. See Campaign Finance's Parallel Probes,
Washington Post (Aug. 6, 1998); GOP Probers Report $50,000 in Illegal
Donations Via Trie, Washington Times (Aug. 5, 1998); House Committee
Threatens Reno, New York Times (Aug. 5, 1998); Bank Data Link Trie,
Democrats to Foreign $50,000, Arkansas Democrat-Gaxette (Aug. 5, 1998);
Reno Defies GOP Pressure on Donor Probe, Los Angeles Times (Aug. 5,
1998).
---------------------------------------------------------------------------
6. The Committee Leaked Confidential Information
Since the beginning of the campaign finance investigation,
the Committee leaked many documents, without regard for the
impact of those leaks on the Committee, criminal
investigations, or the rights of private citizens.
In November 1996, shortly after Mr. Burton was selected
chairman, it was reported that ``[o]ne of his top aides
improperly leaked the confidential phone logs of former
Commerce Department official John Huang. Burton confirmed . . .
that [his aide] had leaked the records to the
media.''205
---------------------------------------------------------------------------
\205\ Burton Admits Aide Leaked Huang Record, Roll Call (Nov. 25,
1996).
---------------------------------------------------------------------------
Following that incident, two senior majority staff
interviewed businesswoman Vivian Mannerud on February 27, 1997,
at her place of business and without her counsel present. The
staff assured her that her interview would be used only for
official business. On April 4, 1997, however, the New York
Times, citing ``congressional investigators,'' published a
front-page story about contributions Ms. Mannerud allegedly
solicited for Democrats.206
---------------------------------------------------------------------------
\206\ Letter from Rep. Waxman to Chairman Burton (June 4, 1997).
---------------------------------------------------------------------------
Chairman Burton or his staff also appear to have leaked
documents subpoenaed by the Committee to the plaintiffs suing
the federal government to overturn the Interior Department's
decision to deny a casino application in Hudson, Wisconsin. DNC
employee David Mercer testified under oath at his deposition
that he was contacted by a Milwaukee reporter and asked about
certaindocuments in the Committee's possession. When Mr. Mercer
asked how the reporter got the documents, the reporter told him that
``investigators had released documents from the House committee to
lawyers in the litigation, and then the lawyers in the litigation
released it to the press.'' 207
---------------------------------------------------------------------------
\207\ Deposition of David Mercer, 150 (Aug. 26, 1997).
---------------------------------------------------------------------------
In another example, Florida attorney Charles Intriago was
deposed by the Committee on February 20, 1998. Mr. Intriago
agreed to appear only after being assured by the majority's
chief counsel that the deposition would be taken in executive
session and would not be leaked to the press. Despite those
assurances, Mr. Intriago was contacted by a reporter for the
Miami Herald about the deposition ``within an hour of leaving
the deposition.'' 208
---------------------------------------------------------------------------
\208\ Letter from Robert Plotkin to majority Chief Counsel Richard
Bennett (Feb. 20, 1998).
---------------------------------------------------------------------------
7. The Committee Excluded the Minority From Witness Interviews
Prior investigations have followed a bipartisan approach
and included the minority in witness interviews. In the 104th
Congress, for example, Chairman Hyde specifically provided that
all witness interviews conducted by the Select Subcommittee on
the United States Role in Iranian Arms Transfers to Croatia and
Bosnia be jointly conducted with majority and minority
staff.209 Similar policies were followed during the
Watergate, Iran-Contra, Senate Whitewater, and Senate Campaign
Finance investigations.210 In the 105th Congress,
the Select Committee on U.S. National Security and Military/
Commercial Concerns with the People's Republic of China chaired
by Rep. Christopher Cox followed the same precedent, even
hiring a bipartisan investigative staff to conduct
interviews.211
---------------------------------------------------------------------------
\209\ Letter from Rep. Waxman to Chairman Burton (June 4, 1997).
\210\ Id.
\211\ Cox Pledges Small Staff Despite Near-Record Budget
Authorization, The Hill (July 1, 1998).
---------------------------------------------------------------------------
Chairman Burton rejected minority requests to follow this
precedent and conduct joint witness interviews.212
In fact, the majority did not even give notice to the minority
when they planned to conduct interviews. According to Committee
activity reports, the majority made at least 50 investigative
trips without notice to the minority, including trips to Los
Angeles, San Francisco, New York, Chicago, Miami, Orlando,
Milwaukee, Detroit, Houston, Little Rock, Oklahoma City, and
Columbus.
---------------------------------------------------------------------------
\212\ Letter from Rep. Waxman to Chairman Burton (June 4, 1997).
---------------------------------------------------------------------------
8. The Committee Violated Its Own Budget Rules
Finally, the majority even denied the minority a fair
allocation of Committee resources. At the beginning of the
104th Congress, House Oversight Chairman Thomas stated, ``To
ensure fairness to all Members, the Republicans, when they were
in the minority, argued that all committees should allocate at
least one-third of resources to the minority. As the new
majority, Republicans remain committed to achieving that
goal.'' 213 Despite this pledge, the minority
received less than 25% of the Committee's budget. In fact,
although the Government Reform and Oversight Committee was
given the single-largest budget in the House, the Republicans
gave the minority the smallest share of any committee in the
House.
---------------------------------------------------------------------------
\213\ Committee on House Oversight's Funding Resolution Report for
the 104th Congress, Rpt. 104-74, 7.
---------------------------------------------------------------------------
The Committee's actions also violated Committee rule 18(e),
which requires that the Chairman prepare a budget in
consultation with the minority. The minority was not consulted
on the Committee's budget and, in fact, was not provided a copy
of the budget until two weeks after it was submitted to the
House Oversight Committee.214 Chairman Burton also
did not consult with the minority on his request for an
additional $1.8 million from the Oversight Committee's reserve
fund in 1998.215
---------------------------------------------------------------------------
\214\ Letter from Rep. Waxman to Chairman Burton (Feb. 26, 1997);
Letter from Rep. Waxman to Chairman Thomas and Rep. Gejdenson (Feb. 28,
1997).
\215\ Letter from Rep. Waxman to Chairman Thomas and Rep. Gejdenson
(Feb. 3, 1998).
---------------------------------------------------------------------------
In another example of budgetary unfairness, the majority
rejected the minority's request to hire an outside consultant
even after approving four consultant contracts for the
majority. The Committee's budget provided funds for both the
majority and the minority to retain consultants. The majority
used these funds to hire former chief counsel Richard Bennett
as well as three other consultants.216 After the
minority raised concerns that, as a consultant, Mr. Bennett
would not be required to comply with House ethics
rules,217 Mr. Bennett agreed to ``comply with the
House's code of official conduct.'' 218 The
majority, however, rejected the minority's request for a
consultant even after the proposed consultant provided the
Committee with a letter in which it agreed to adhere to the
same standards being followed by Mr. Bennett.219
---------------------------------------------------------------------------
\216\ The three consultants hired for the investigation were
Charles Little, Phillip Larsen, and Ward Warren.
\217\ Letter from Rep. Waxman to Chairman Burton (Aug. 28, 1998).
\218\ Letter from Richard Bennett to Chairman Burton (Sept. 4,
1998).
\219\ Committee Meeting (Sept. 24, 1998).
---------------------------------------------------------------------------
D. The Committee Wasted Taxpayer Dollars
Early in the investigation, the Committee's inflated budget
led the Wall Street Journal's Al Hunt to remark, ``The biggest
losers will be taxpayers. The Burton-led circus . . . could
cost between $6 million and $12 million.'' 220
Unfortunately, Mr. Hunt's prediction appears to have come true.
The minority estimates that the cost of the investigation has
already surpassed $7.4 million.
---------------------------------------------------------------------------
\220\ Albert R. Hunt, The Witch Hunt in the House, Wall Street
Journal (Apr. 10, 1997).
---------------------------------------------------------------------------
1. The Committee Has the Largest Budget of Any Committee in the History
of Congress
Chairman Burton's original budget request for the Committee
for the 105th Congress was $16.2 million. He then called this
budget request ``totally inadequate'' to conduct the campaign
finance investigation,221 prompting the House to
approve a $3.8 million supplemental appropriation for the
investigation for 1997.222 The result was an overall
budget for the Committee of $20 million.223 This was
an increase of $6.5 million--nearly 50%--from the Committee's
budget in the 104th Congress.
---------------------------------------------------------------------------
\221\ Burton: Democrats Won't Get One-Third of Budget for Probe, CQ
Monitor (Feb. 27, 1997).
\222\ H. Res. 91 (Mar. 21, 1997).
\223\ Id.
---------------------------------------------------------------------------
In 1998, Chairman Burton requested additional funds from
the House ``reserve'' fund to continue the investigation. He
received $1.8 million from this fund for the investigation
224 and an additional $1.15 million from the reserve
fund to fund the newly created Census Subcommittee for 11
months.225 This brought the total budget for the
Committee for the 105th Congress to $23 million.
---------------------------------------------------------------------------
\224\ Dems Blast GOP Over Expansion of Clinton Probe, Roll Call
(Mar. 26, 1998).
\225\ Approved by the Committee on House Oversight on Feb. 24,
1998.
---------------------------------------------------------------------------
This budget was nearly ten times larger than the $2.4
million budget the Republican leadership gave to the House
Committee on Standards of Official Conduct (the ``Ethics
Committee'') to investigate misconduct by
members.226 It was also 50% larger than the $14.6
million budget for the House Commerce Committee, which had the
second largest committee budget in the House.227
---------------------------------------------------------------------------
\226\ H. Res. 62 (Feb. 13, 1997).
\227\ H. Res. 74 (Feb. 25, 1997).
---------------------------------------------------------------------------
2. The Committee Spent Over $7.4 Million on the Campaign Finance
Investigation
The minority estimates that the House Government Reform and
Oversight Committee's campaign finance investigation has cost
the taxpayers in excess of $7.4 million through August 31,
1998.
The minority's estimate is based on a review of expenses
associated with the investigation reported in the House Chief
Administrative Officer's reports and the Committee's monthly
activity reports for the 105th Congress.228 The
minority staff estimates that the Committee spent over $5.7
million in taxpayer dollars on staff salaries and overtime;
over $120,000 on domestic travel; and over $80,000 for foreign
travel paid for by the State Department. The Committee
transcribed over 24,000 pages of testimony and statements taken
in depositions, hearings, and meetings at an estimated cost to
the taxpayer of $70,000 to $140,000 and spent over $300,000
paid for by the Government Printing Office to reproduce this
material for public distribution. Some of the other categories
of Committee expenses estimated by the minority staff include
expenses for consultants (over $200,000); executive agency
personnel detailed to the investigation (over $100,000); and
equipment and supplies (over $500,000).
---------------------------------------------------------------------------
\228\ House CAO reports were received through June 1998; Committee
activities reports were reviewed through August 1998.
---------------------------------------------------------------------------
The majority disputed previous minority staff estimates of
the cost of the investigation. On May 11, 1998, after several
requests from minority members to account for the Committee's
expenses, Chairman Burton wrote Rep. Waxman that the Committee
spent less than $2.5 million on the investigation in
1997.229 Chairman Burton's figures, however, were
substantially understated. According to a Roll Call analysis
published in July 1998, ``Chairman Dan Burton's (R-Ind.) staff
provided numbers that do not accurately reflect the actual cost
of his investigation into fundraising abuses. . . . Burton does
not include the salaries and expenses for investigators . . .
who spent virtually all of their time on the investigation but
were paid with money from the committee's general budget.''
230 Chairman Burton's figures also excluded the
costs of transcribing Committee depositions, hearings, and
meetings; GPO printing costs; and the cost of foreign travel.
The Roll Call analysis found that ``the actual number is much
closer to the Democrats' figure.'' 231
---------------------------------------------------------------------------
\229\ Letter from Chairman Burton to Rep. Waxman (May 11, 1998).
\230\ Democrats' Report Doesn't Add Up; Republican Numbers Aren't
Any More Precise, Roll Call (July 13, 1998).
\231\ Id.
---------------------------------------------------------------------------
3. The Investigation is the Most Expensive and Least Productive
Congressional Investigation in History
Chairman Burton's campaign finance investigation has been
the most expensive congressional investigation in history. The
costs of this investigation far exceed the $1.9 million spent
on the Senate Whitewater investigation and the $5 million spent
on the House and Senate Iran-Contra investigations. They also
exceed the $7 million spent on the Senate Watergate
investigation. These figures are adjusted for inflation.\232\
---------------------------------------------------------------------------
\232\ Whitewater: Comparison of Cost and Other Selected Data with
Previous Investigations, CRS Report for Congress (Feb. 9, 1998) (98-101
GOV).
---------------------------------------------------------------------------
The Republican leadership even devoted more resources to
the Burton investigation than it allocated to the Federal
Election Commission for compliance and enforcement of federal
election law. The FEC enforcement staff consists of 24 staff
attorneys, 12 paralegals, and 2 investigators. Even including
the FEC General Counsel and 5 Assistant General Counsels, who
spend a portion of their time supervising enforcement actions,
the FEC enforcement division has a staff of only 43.\233\ This
is significantly fewer than the estimated 50 majority staff and
19 minority staff actually working on the Burton investigation
at any given time.
---------------------------------------------------------------------------
\233\ House Committee on Government Reform and Oversight, Hearings
on Federal Election Commission Enforcement Actions: Foreign Campaign
Contributions and Other FECA Violations, 105th Cong., 2d Sess. (Mar.
31, 1998).
---------------------------------------------------------------------------
The investigation also was far less productive than these
other investigations. The Senate Whitewater investigation held
66 days of public hearings, the Iran-Contra investigation held
40 days of public hearings, and the Senate Watergate
investigation held 53 days of public hearings.\234\ The Senate
Governmental Affairs Committee campaign finance investigation
held 33 days of hearings and published a 1,100-page report
while spending less than $3.5 million.\235\ On the other hand,
as reported in the Wall Street Journal, the Committee's
investigation ``conducted just a handful of hearings that
disclosed no major new evidence.'' \236\ It held only nine
public hearings over 15 days.\237\ In fact, in 1998, the
Committee did not hold a single day of investigative hearings
on the role of foreign contributions in the 1996 campaign,
which was supposed to be the primary focus of the
investigation. Even Republicans commented on the Committee's
lack of productivity. One senior Republican leadership aide
observed, ``It's been very expensive, and it hasn't amounted to
much.'' \238\
---------------------------------------------------------------------------
\234\ Id.
\235\ Senate Report, v. 6, 8687.
\236\ Burton's Campaign-Finance Probe Is Drawing Criticism for
Mounting Costs and Slow Progress, Wall Street Journal (Mar. 27, 1998).
\237\ House Committee on Government Reform and Oversight. Hearings
on Campaign Finance Improprieties and Possible Violations of Law. 105th
Cong., 1st Sess., 7 (Oct. 8, 1997); House Committee on Government
Reform and Oversight, Hearings on Conduit Payments to the Democratic
National Committee, 105th Cong., 1st Sess. (Oct. 9, 1997); House
Committee on Government Reform and Oversight, Hearings on White House
Compliance with Committee Subpoenas, 204 (Nov. 6, 7, 1997); House
Committee on Government Reform and Oversight, Hearings on Johnny Chung:
His Unusual Access to the White House, His Political Donations and
Related Matters, 105th Cong., 1st Sess., 89 (Nov. 13, 14, 1997); House
Committee on Government Reform and Oversight, Current Implementation of
the Independent Counsel Act, 105th Cong., 1st Sess. (Dec. 9, 10, 1997);
House Committee on Government Reform and Oversight, Hearings on the
Department of the Interior's Denial of the Wisconsin Chippewa's Casino
Application, 105th Cong., 2d Sess., v. 1 (Jan. 21, 22, 28, 29, 1998);
House Committee on Government Reform and Oversight, Hearing on Federal
Election Commission Enforcement Actions: Foreign Campaign Contributions
and Other FECA Violations, 105th Cong., 2d Sess., 108-109 (Mar. 31,
1998); House Committee on Government Reform and Oversight, Hearing on
Venezuelan Money and the Presidential Election, 105th Cong., 2d Sess.
(Apr. 30, 1998); House Committee on Government Reform and Oversight,
Hearing on the Need for an Independent Counsel in the Campaign Finance
Investigation, 105th Cong., 2d Sess., 66-67 (Aug. 4, 1998).
\238\ Burton's Request for Funds Stalls as Investigation Fatigue
Hits GOP, CQ's Inside Congress (Mar. 21, 1998).
---------------------------------------------------------------------------
4. The Investigation Squandered Taxpayer Dollars
Not only did the Committee receive an enormous budget for
the investigation, the Committee squandered this money in a
wasteful fashion with no accountability to the taxpayers. For
example, in early March 1997, the minority learned that the
majority was planning to spend thousands of dollars to create a
computer database for the storage of the hundreds of thousands
of pages of documents obtained by the Committee over the course
of the investigation. The minority requested that this database
be shared, as has been the practice in other major
investigations such as Watergate and Iran-Contra.\239\ This
would allow both the majority and the minority to search and
retrieve documents, and create a common index for use during
hearings. Chairman Burton rejected the minority's proposal to
share the database, forcing the minority to waste thousands of
dollars on duplicate systems.\240\ The original estimate for
the cost of the majority's database was $40,000; it is now
estimated to have cost the taxpayers $60,000.\241\
---------------------------------------------------------------------------
\239\ See Senate Report, v. 6, 8687 (1998).
\240\ Letter from Rep. Waxman to Chairman Burton (May 15, 1997).
\241\ Letter from Rep. Waxman to Chairman Burton (May 15, 1997);
Gingrich, Hyde Will Tap Clinton Scandal Database, Roll Call (Mar. 23,
1998).
---------------------------------------------------------------------------
In another example of waste, the Committee took two trips
to Asia at a very high cost and with no benefit. In December
1997, the Committee sent four staff members to Asia for a 19-
day investigative trip. In total, the staff spent only two days
investigating in Thailand, only three days in Indonesia, and
only an hour in Singapore. The investigation consisted of eight
interviews in Bangkok, four interviews in Jakarta, and
``observing'' a private residence in Jakarta and an office
building in Singapore. The trip was carelessly planned to
coincide with two national holidays in Thailand and five
weekend days. It is estimated that this trip alone cost the
taxpayers over $40,000.
Despite this experience, the majority conducted another
foreign trip to Asia in March 1998. This trip was equally
wasteful and resulted in no new information. The 15-day trip
included 2 days in Singapore with 4 interviews, and 7 days in
Taiwan with 7 interviews. In the Wall Street Journal, Chairman
Burton's staff director justified the trip by stating, ``Not
every trip is going to be productive, but you don't know until
you try.'' \242\
---------------------------------------------------------------------------
\242\ Burton's Campaign-Finance Probe is Drawing Criticism for
Mounting Costs and Slow Progress, Wall Street Journal (Mar. 27, 1998).
---------------------------------------------------------------------------
The majority also insisted on sending senior staff to
Florida to retrieve a computer disk that could have been mailed
to the Committee for the cost of first-class
postage.243 On June 23, 1997, the Committee sent
three staff members (including the majority chief investigative
counsel) to Miami to retrieve a computer disk that was alleged
to contain information relevant to the Committee's
investigation. This two-day trip wasted thousands of dollars
and a total of six working days of staff time. The disk
ultimately provided the Committee with little useful
information.
---------------------------------------------------------------------------
\243\ Letter from Rep. Waxman to Speaker Gingrich (July 7, 1997).
---------------------------------------------------------------------------
The Committee's frivolous expenses were also exemplified by
Chairman Burton's ``wall of shame.'' At the April 23, 1998,
Committee meeting, Chairman Burton unveiled a ``mock stone wall
measuring six feet by 20 feet.'' 244 Attached to the
corkboard were ``big glossy shots of Democratic contributors .
. . and a special spot for the biggest photo, a picture of
President Clinton.'' 245 Rep. Robert Wise observed,
``When I visit my children's school, I see things like this up
on the wall. It's childish and unprofessional for this
committee.'' 246 According to one journalist, ``in
the light of day, it seemed more like something from an Ed Wood
set.'' 247 Despite requests from the Committee's
minority members, Chairman Burton refused to disclose the cost
of the collage.248
---------------------------------------------------------------------------
\244\ David Grann, Housebroken, The New Republic (May 18, 1998).
\245\ Id.
\246\ Angry House Democrats Derail GOP Donor Probe Tactic, Los
Angeles Times (Apr. 24, 1998).
\247\ David Grann, Housebroken, The New Republic (May 18, 1998).
\248\ See House Committee on Government Reform and Oversight,
Business Meeting (May 13, 1998).
---------------------------------------------------------------------------
5. The Investigation Duplicated the Senate Investigation
Since the beginning of the campaign finance controversy,
minority Committee members have supported efforts to conduct
one coordinated congressional inquiry, rather than the two
duplicative investigations actually conducted by the House
Government Reform and Oversight Committee and the Senate
Governmental Affairs Committee. In an op-ed published in the
New York Times on February 28, 1997, Rep. Waxman noted, ``This
waste of tax dollars makes no sense--identical multimillion-
dollar Senate and House investigations are redundant. They
should be merged into one comprehensive effort.''
249
---------------------------------------------------------------------------
\249\ Rep. Waxman, Campaign Reform Made Whole, New York Times (Feb.
28, 1997).
---------------------------------------------------------------------------
Similarly, on March 6, 1997, over 100 minority members, led
by Reps. Gary Condit, Ed Towns, and John Tierney wrote Speaker
Gingrich to request one consolidated
investigation.250 The letter stated:
---------------------------------------------------------------------------
\250\ Letter from Rep. Gephardt, et al. to Speaker Gingrich (Mar.
6, 1997).
We support a thorough and comprehensive investigation
into all alleged campaign finance abuses. But it makes
no sense to direct multiple congressional committees to
investigate the very same alleged abuses. Multiple
investigations are duplicative and wasteful. . . . To
avoid this needless waste of taxpayer dollars, the
congressional investigation into alleged campaign
finance abuses should be consolidated into one thorough
investigation.251
---------------------------------------------------------------------------
\251\ Id.
Six months later, Rep. Waxman again asked Speaker Gingrich
to avoid redundant investigations. In a July 7, 1997, letter,
Rep. Waxman wrote that since the ``Committee is doing nothing
more than duplicating the Senate's work, I believe the House
should defer to Senator Thompson . . . instead of wasting
millions of taxpayer dollars on an identical but mistake-
plagued House investigation.'' 252
---------------------------------------------------------------------------
\252\ Letter from Rep. Waxman to Speaker Gingrich (July 7, 1997).
---------------------------------------------------------------------------
Speaker Gingrich never responded to either of these
letters. Instead, the Committee continued to spend millions of
dollars duplicating the work of the Senate investigation.
Chairman Burton issued 307 document subpoenas to individuals or
entities that were subpoenaed by the Senate.253
Similarly, the Committee deposed 44 witnesses who were deposed
by the Senate.254 In total, almost one-half of the
document subpoenas issued by Chairman Burton and one-quarter of
the depositions taken by the Committee duplicated the subpoenas
and depositions in the Senate campaign finance investigation.
Furthermore, the Committee's hearings on conduit contributions,
White House compliance with Committee subpoenas, and the
Interior Department's decision to deny the Hudson casino
application duplicated hearings already held by the
Senate.255
---------------------------------------------------------------------------
\253\ List of Senate subpoenas provided by Senate Governmental
Affairs Committee.
\254\ List of Senate depositions provided by the Senate
Governmental Affairs Committee. At one point during the investigation,
Rep. Gary Condit offered an amendment to the Committee rules that would
have required the Chairman to consult with the chairman of the Senate
Governmental Affairs Committee to attempt to avoid duplication of
depositions. The amendment was defeated. Congressional Record, H4094
(June 20, 1997).
\255\ On Oct. 9, 1997, the Committee held hearings on conduit
contributions made to the DNC by Charlie Trie. House Committee on
Government Reform and Oversight, Hearings on Conduit Payments to the
Democratic National Committee, 105th Cong., 1st Sess. (Oct. 9, 1997).
This hearing covered the same issues examined in a Senate Governmental
Affairs Committee hearing on July 29, 1997. On Nov. 6 and 7, 1997, the
Committee held hearings on White House compliance with congressional
subpoenas, including the delayed production of videotapes of
fundraising events. House Committee on Government Reform and Oversight,
Hearings on White House Compliance With Committee Subpoenas, 105th
Cong., 1st Sess., 163 (Nov. 6, 7, 1997). These hearings covered the
same issues covered in a Senate Governmental Affairs Committee hearing
on Oct. 23, 1997. Similarly, on Jan. 21, 22, 28, 29, 1998, the
Committee held hearings on the Department of the Interior's decision to
deny an application for an off-reservation Indian Casino in Hudson,
Wisconsin. House Committee on Government Reform and Oversight, Hearings
on the Department of the Interior's Denial of the Wisconsin Chippewa's
Casino Applications, 105th Cong., 2d. Sess., v. 1 (Jan. 21, 22, 28, 29,
1998). This same issue was examined in a Senate Governmental Affairs
Committee hearing on Oct. 30, 1997.
---------------------------------------------------------------------------
Chairman Burton and other majority members were concerned
about the cost of this duplication to the taxpayers when the
allegations involved Republican campaign finance abuses,
however.256 At the October 8, 1998, Committee
meeting, for example, Chairman Burton said that the Committee
did not investigate allegations of Republican fundraising
abuses related to Triad Management Services because ``[i]t was
thoroughly investigated by the Senate . . . and there was no
need to duplicate their efforts.'' 257 Not only was
this another example of a double standard, Chairman Burton's
statement was also factually inaccurate. As described in Part
IV, the Senate investigation into Triad was thwarted by Triad's
lack of cooperation.
---------------------------------------------------------------------------
\256\ These allegations are discussed in detail in Part IV of this
report.
\257\ Chairman Dan Burton, House Committee on Government Reform and
Oversight, Business Meeting (Oct. 8, 1998).
---------------------------------------------------------------------------
6. The Investigation Duplicated Other House Investigations
In addition to duplicating the Senate's investigation, the
Committee duplicated other House investigations. At least 14
other House committees investigated campaign finance issues in
the 105th Congress. These committees were: Committee on
Appropriations; Committee on Banking and Financial Services;
Committee on the Budget; Committee on Commerce; Committee on
House Oversight; Committee on International Relations;
Committee on the Judiciary; Committee on National Security;
Committee on Resources; Committee on Rules; Committee on Small
Business; Committee on Standards of Official Conduct (``Ethics
Committee''); Committee on Ways and Means; and the Permanent
Select Committee on Intelligence.258
---------------------------------------------------------------------------
\258\ Federal agencies reported to the GAO that they received
campaign finance inquiries from these committees. See Committee on
Government Reform and Oversight, Minority Staff Report, The Cost of
Congressional Campaign Finance Investigations to the U.S. Taxpayers
(Oct. 7, 1998).
---------------------------------------------------------------------------
The Committee's investigation often simply replicated work
being done by these other committees. For example, the
Committee duplicated much of the investigation being conducted
by the House Education and the Workforce Committee into the
nullified Teamsters elections. Chairman Burton subpoenaed the
International Brotherhood of Teamsters, the Ron Carey campaign,
and Citizen Action for information related to the union
election even though the Education and the Workforce Committee
had retained outside counsel and held hearings on that
issue.259
---------------------------------------------------------------------------
\259\ Subpoenas from the Government Reform and Oversight Committee
to: the International Brotherhood of Teamsters (Oct. 23, 1997); the Ron
Carey Campaign (Oct. 23, 1997); Citizen Action (Nov. 12, 1997).
---------------------------------------------------------------------------
The Committee also duplicated the House Resources
Committee's investigation into the Interior Department's
decision to deny the Hudson casino application. On December 18,
1997, the Resources Committee issued a subpoena to the
Democratic National Committee for all recordsrelating to the
Hudson casino. This Committee then issued six subpoenas on the same
matter.260
---------------------------------------------------------------------------
\260\ Subpoenas from House Government Reform and Oversight
Committee to: White House (Aug. 21, 1997); Patrick O'Connor (Oct. 27,
1997); O'Connor & Hannan (Oct. 27, 1997); Franklin Ducheneaux (Oct. 27,
1997); Ducheneaux, Taylor & Associates (Oct. 27, 1997); and the
Department of the Interior (Dec. 12, 1997).
---------------------------------------------------------------------------
The full Committee even duplicated the investigations of
its own subcommittees. On March 5, 1998, Government
Information, Management, and Technology Subcommittee Chairman
Steve Horn held a Federal Election Commission oversight
hearing. The Subcommittee heard testimony from Lawrence Noble,
the FEC general counsel, who was questioned in detail about the
FEC's decision not to take action against DNC contributor
Howard Glicken. Mr. Noble answered these questions fully and
explained the FEC's decision thoroughly.261 Despite
this testimony, Chairman Burton scheduled a full Committee
hearing on the same issue for March 31, 1998. The primary
witness was Mr. Noble, who was asked identical questions to
those posed at the Subcommittee hearing.262
---------------------------------------------------------------------------
\261\ Subcommittee on Government Management, Information, and
Technology, Hearings on Oversight of the Federal Election Commission,
105th Cong., 2d Sess. (Mar. 5, 1998).
\262\ House Committee on Government Reform and Oversight, Hearings
on Federal Election Commission Enforcement Actions: Foreign Campaign
Contributions and Other FECA Violations, 105th Cong., 2d Sess., 108-109
(Mar. 31, 1998).
---------------------------------------------------------------------------
In another example of the intra-Committee duplication, the
full Committee and the Subcommittee on National Economic
Growth, Natural Resources, and Regulatory Affairs both issued
requests for identical information from the DNC.263
For example, on February 2, 1998, Rep. McIntosh, the
Subcommittee chairman, issued a formal document request to the
DNC for ``all computer entries from the computer files of Ann
Braziel reflecting DNC-Finance sponsored coffees'' even though
Chairman Burton had subpoenaed ``[a]ll records relating to the
meetings generally known as White House coffees'' less than a
year earlier.264
---------------------------------------------------------------------------
\263\ Subpoena from House Committee on Government Reform and
Oversight to the DNC (Mar. 4, 1997); Letter from Rep. McIntosh to Judah
Best (Feb. 2, 1998).
\264\ Letter from Rep. McIntosh to Judah Best (Feb. 2, 1998);
Subpoena from House Committee on Government Reform and Oversight to the
DNC (Mar. 4, 1997).
---------------------------------------------------------------------------
7. The Investigation Imposed Large Costs on Federal Agencies
The congressional investigations into campaign finance
abuses have placed a heavy burden on the federal government. In
an effort to determine the costs and burdens of the campaign
finance investigation, Rep. Henry Waxman and Rep. Gary Condit
asked the General Accounting Office toconduct a survey of the
executive agencies.\265\ The request asked GAO to ``identify the number
of Congressional inquires made and the related costs incurred by those
agencies.'' \266\
---------------------------------------------------------------------------
\265\ Letter from Reps. Henry Waxman and Gary Condit to Acting
Comptroller General of the United States James F. Hinchman (Feb. 3,
1998).
\266\ Id.
---------------------------------------------------------------------------
The GAO survey asked 148 executive agencies to provide
information on campaign finance inquiries received from October
1, 1996--the time the first allegations of campaign finance
abuses arose--through March 31, 1998.\267\ The agencies were
asked the following questions about the congressional campaign
finance requests: how many written inquiries were received from
Congress; how many agency officials testified before Congress;
how many additional oral communications the agency had with
Congress; actual or estimated personnel costs associated with
responding to the congressional inquiries; actual or estimated
pages of documents submitted in response to the congressional
inquires and the reproduction and delivery costs; the cost of
any outside contractors used to respond to the congressional
inquiries; and to what extent the agency encountered
duplication among the congressional requests. The survey also
gave the agencies the opportunity to describe any problems or
other comments regarding the inquiries.
---------------------------------------------------------------------------
\267\ GAO Survey of Executive Branch Cost to Respond to
Congressional Campaign Finance Inquiries (June 23, 1998).
---------------------------------------------------------------------------
GAO found that 21 executive agencies reported receiving
1,156 campaign finance inquiries from Congress during those 18
months.\268\ This means that federal agencies received, on
average, three congressional inquiries each working day during
the period surveyed by GAO. The costs of responding to these
requests reported by the agencies totaled $8,767,753.36.\269\
---------------------------------------------------------------------------
\268\ Letter from Associate Director, Audit Oversight and Liaison,
Theodore C. Barreaux to Rep. Waxman and Rep. Condit (Sept. 29, 1998).
\269\ Id.
---------------------------------------------------------------------------
The actual costs, however, are likely to be even higher
than the figure reported by GAO, because the GAO figure does
not include costs incurred for requests received after March
31, 1998, and does not include various personnel costs,
document reproduction costs, or delivery costs not reported by
certain agencies.\270\ The minority staff analyzed the
responses to the GAO survey filed by the federal agencies.
These responses showed that (1) the federal agencies spent over
150,000 hours responding to congressional campaign finance
inquires; (2) the federal agencies provided over 2.1 million
pages of documents to Congress in response to these inquiries;
and (3) 18 of the 21 agencies reported that the congressional
inquiries were duplicative.\271\
---------------------------------------------------------------------------
\270\ Id. at Enclosure 1 (footnotes). For example, the Department
of Energy, which received 47 congressional requests and produced 43,340
pages of documents, did not provide GAO with personnel costs, document
reproduction costs, or document delivery costs related to those
requests. Similarly, the State Department, which reported spending
3,386 hours responding to 65 requests, did not provide GAO with its
personnel costs.
\271\ Minority Staff Report, Committee on Government Reform and
Oversight, The Cost of Congressional Campaign Finance Investigations to
the U.S. Taxpayer (Oct. 7, 1998).
---------------------------------------------------------------------------
8. The Total Costs to the Taxpayer from Congressional Campaign Finance
Investigations Exceed $23 Million
The Government Reform and Oversight Committee minority
staff estimates that the cost to taxpayers of the congressional
campaign finance investigations conducted during the 105th
Congress totals more than $23 million. As noted above,
according to GAO, federal agencies reported spending at least
$8.7 million responding to congressional inquiries for
information related to campaign finance.\272\ In addition to
these federal agency costs, the minority staff estimates that
Congress has spent at least $14.6 million conducting multiple
campaign finance investigations. This includes this Committee's
$7.4 million investigation \273\ and the Senate Governmental
Affairs Committee's $3.5 million campaign finance
investigation.\274\ The House also authorized $1.2 million for
the Education and the Workforce Committee's inquiry into
campaign finance abuses related to the Teamsters \275\ and $2.5
million for a select committee to investigate allegations that
the Clinton administration gave missile technology to China in
exchange for campaign contributions.\276\
---------------------------------------------------------------------------
\272\ Id.
\273\ Id.
\274\ Burton's Campaign-Finance Probe Is Drawing Criticism for
Mounting Costs and Slow Progress, Wall Street Journal (Mar. 27, 1998).
\275\ The House Oversight Committee appropriated $747,274.75 at the
Mar. 4, 1998, committee meeting and an additional $296,543 at the Oct.
2, 1998, committee meeting. The Education and the Workforce Committee
also approved a $150,000 consultant contract for outside counsel for
the Teamsters investigation out of the committee's regular budget.
Leaders Seek Subpoena Power for Investigation of Teamsters, Roll Call
(Mar. 23, 1998).
\276\ H. Res. 463 (June 18, 1998).
---------------------------------------------------------------------------
As noted above, these four congressional committees--the
House Government Reform Committee, the Senate Governmental
Affairs Committee, the House Education and the Workforce
Committee, and the Select Committee on U.S. National Security
and Military/Commercial Concerns with the People's Republic of
China--are not the only congressional committees that have
investigated alleged campaign finance abuses in the 105th
Congress. This report, however, does not estimate the cost to
the taxpayers of the investigations by the other committees. If
these additionalcosts were included, the total congressional
costs would undoubtedly far exceed $14.6 million and the total cost to
taxpayers would far exceed $23 million.
9. The Investigation Imposed Large Costs on the DNC and Other Private
Parties
The Committee's investigation also imposed large and
unnecessary costs on private parties, including individual
citizens. One of the main targets of the investigation was the
DNC. In total, Chairman Burton issued 18 information requests
to the DNC, including six subpoenas, ten document requests, and
two sets of interrogatories in connection with the campaign
finance investigation. \277\ The Committee also deposed 23 DNC
employees and heard public testimony from one other DNC
employee.
---------------------------------------------------------------------------
\277\ See, e.g., Subpoenas from House Committee on Government
Reform and Oversight to the DNC (Mar. 4, 1997; Aug. 22, 1997; Sept. 17,
1997; Jan. 22, 1998; and Mar. 12, 1998).
---------------------------------------------------------------------------
According to attorneys for the DNC, in order to comply with
the Committee's subpoenas, the DNC was forced to use 22
employees, including 10 attorneys, solely to search and prepare
documents for production. The DNC estimates that it had to
search nearly 10 million pages of materials to find responsive
documents. The DNC produced over 600,000 pages of documents at
a cost of more than $6.1 million to this Committee. The DNC
also incurred $8.8 million in legal fees.\278\ Thus, the total
cost to the DNC was nearly $15 million.
---------------------------------------------------------------------------
\278\ Minority staff phone interview of Paul Palmer, Debevois &
Plimpton (Sept. 23, 1998).
---------------------------------------------------------------------------
The investigation also imposed substantial and unnecessary
costs on private businesses. For example, CommerceCorp--a small
business with just a few employees headed by former White House
aide Mark Middleton--spent approximately $100,000 and 3\1/2\
full days going through documents to comply with the
Committee's subpoena. According to one of the company's
employees, the cost of the investigation put the company's
future in jeopardy.\279\ PRC, Inc., which was under contract
with the White House to provide computer services, spent more
money responding to document requests and attending depositions
related to the WhoDB investigation than it did fulfilling the
terms of its White House contract.\280\
---------------------------------------------------------------------------
\279\ Minority staff conversation with Robert Luskin, attorney for
CommerceCorp employee Holli Weymouth (July 1997).
\280\ Deposition of Donald Upson, 61 (Aug. 7, 1997).
---------------------------------------------------------------------------
The greatest costs were often borne by individuals. Maggie
Williams, for example, the former chief of staff to the First
Lady, incurred over $350,000 in legal fees in connection with
the congressional investigations.\281\
---------------------------------------------------------------------------
\281\ In the Loop, Washington Post (July 13, 1998).
---------------------------------------------------------------------------
E. The Investigation Was Widely Criticized
1. The Views of Editorial Boards
Over the past 20 months, Chairman Burton's actions have
undercut the credibility of the Committee's campaign finance
investigation. As a result of these actions, editorial boards
around the country have concluded that Chairman Burton's
investigation lost all credibility.
In total, at least 40 newspapers have criticized the
Committee's investigation in over 60 editorials. The editorials
include the following: \282\
---------------------------------------------------------------------------
\282\ These editorials are attached to this report as Exhibit 3.
---------------------------------------------------------------------------
``Ethically Compromised Inquisitor'' \283\
---------------------------------------------------------------------------
\283\ Hartford Courant (Mar. 11, 1997).
---------------------------------------------------------------------------
``Reining In Dan Burton'' \284\
---------------------------------------------------------------------------
\284\ New York Times (Mar. 20, 1997).
---------------------------------------------------------------------------
``Mr. Burton Should Step Aside'' \285\
---------------------------------------------------------------------------
\285\ Washington Post (Mar. 20, 1997).
---------------------------------------------------------------------------
``Millstone of Partisanship; House's Campaign Finance
Inquiry Appears Short on Credibility'' \286\
---------------------------------------------------------------------------
\286\ Los Angeles Times (Apr. 11, 1997).
---------------------------------------------------------------------------
``A House Investigation Travesty'' \287\
---------------------------------------------------------------------------
\287\ New York Times (Apr. 12, 1997).
---------------------------------------------------------------------------
``A Chairman Without Credibility'' \288\
---------------------------------------------------------------------------
\288\ San Francisco Chronicle (Apr. 14, 1997).
---------------------------------------------------------------------------
``A Disintegrating House Inquiry'' \289\
---------------------------------------------------------------------------
\289\ New York Times (July 12, 1997).
---------------------------------------------------------------------------
``Reno Roast Embarrasses Nobody But Congress;
Grilling Of Attorney General Is A Sorry Partisan
Spectacle'' \290\
---------------------------------------------------------------------------
\290\ Los Angeles Times (Dec. 10, 1997).
---------------------------------------------------------------------------
``Soap Opera'' 291
---------------------------------------------------------------------------
\291\ Roll Call (Apr. 27, 1998).
---------------------------------------------------------------------------
``A Chairman Out of Control'' 292
---------------------------------------------------------------------------
\292\ The Hill (Apr. 29, 1998).
---------------------------------------------------------------------------
``Dan, Go to Your Room'' 293
---------------------------------------------------------------------------
\293\ Boston Herald (May 5, 1998).
---------------------------------------------------------------------------
``Burton's Vendetta'' 294
---------------------------------------------------------------------------
\294\ Boston Globe (May 5, 1998).
---------------------------------------------------------------------------
``Dan Burton Is a Loose Cannon'' 295
---------------------------------------------------------------------------
\295\ Hartford Courant (May 5, 1998).
---------------------------------------------------------------------------
``Abuse of Privacy; Burton Should Be Censured''
296
---------------------------------------------------------------------------
\296\ Harrisburg Patriot-News (May 5, 1998).
---------------------------------------------------------------------------
``Rep. Burton Goes Too Far'' 297
---------------------------------------------------------------------------
\297\ Times Union (Albany, New York) (May 5, 1998).
---------------------------------------------------------------------------
``Congressman Plays Dirty with Tapes'' 298
---------------------------------------------------------------------------
\298\ Allentown Morning Call (May 5, 1998).
---------------------------------------------------------------------------
``The Hubbell Tapes; What Is Dan Burton Thinking?''
299
---------------------------------------------------------------------------
\299\ Minneapolis Star Tribune (May 5, 1998).
---------------------------------------------------------------------------
``Clinton's Foes Bungle Again'' 300
---------------------------------------------------------------------------
\300\ Atlanta Constitution (May 5, 1998).
---------------------------------------------------------------------------
``Give Dan Burton the Gate'' 301
---------------------------------------------------------------------------
\301\ Chicago Tribune (May 6, 1998).
---------------------------------------------------------------------------
``Headcase'' 302
---------------------------------------------------------------------------
\302\ New York Daily News (May 6, 1998).
---------------------------------------------------------------------------
``Wild Card: Chairman's Rampage Demeans Entire
House'' 303
---------------------------------------------------------------------------
\303\ Fayetteville Observer-Times (May 6, 1998).
---------------------------------------------------------------------------
``Burton Bumbles In Bad Faith'' 304
---------------------------------------------------------------------------
\304\ San Antonio Express-News (May 6, 1998).
---------------------------------------------------------------------------
``Remove Burton from Money Probe'' 305
---------------------------------------------------------------------------
\305\ Seattle Post-Intelligencer (May 7, 1998).
---------------------------------------------------------------------------
``The Dan Burton Problem'' 306
---------------------------------------------------------------------------
\306\ New York Times (May 8, 1998).
---------------------------------------------------------------------------
``Out of Control'' 307
---------------------------------------------------------------------------
\307\ Roll Call (May 7, 1998).
---------------------------------------------------------------------------
``Burton Unfit to Lead Clinton Probe'' 308
---------------------------------------------------------------------------
\308\ Milwaukee Journal-Sentinel (May 9, 1998).
---------------------------------------------------------------------------
``Mistakes Were Made: Burton Inquiry Can't Reach a
Credible Conclusion'' 309
---------------------------------------------------------------------------
\309\ Sacramento Bee (May 11, 1998).
---------------------------------------------------------------------------
2. The Views of Columnists and Commentators
Columnists and commentators have been equally critical of
Chairman Burton's investigation. The columns include the
following: 310
---------------------------------------------------------------------------
\310\ These columns are attached to this report as Exhibit 4.
---------------------------------------------------------------------------
``The Wrong Man for a Sensitive Job'' 311
---------------------------------------------------------------------------
\311\ Laura Ingraham, New York Times (Nov. 20, 1996).
---------------------------------------------------------------------------
``The Witch Hunt in the House'' 312
---------------------------------------------------------------------------
\312\ Albert R. Hunt, Wall Street Journal (Apr. 10, 1997).
---------------------------------------------------------------------------
``A Wacky Politico Invades Privacy to Get at
Clinton'' 313
---------------------------------------------------------------------------
\313\ Lars-Erik Nelson, New York Daily News (Apr. 22, 1998).
---------------------------------------------------------------------------
``An Abuse of Power'' 314
---------------------------------------------------------------------------
\314\ Richard Cohen, Washington Post (Apr. 28, 1998).
---------------------------------------------------------------------------
``Slime on the Right'' 315
---------------------------------------------------------------------------
\315\ Anthony Lewis, New York Times (May 4, 1998).
---------------------------------------------------------------------------
``House Probe of Campaign Fund-Raising Uncovers
Little, Piles Up Partisan Ill Will'' 316
---------------------------------------------------------------------------
\316\ Marc Lacey, Los Angeles Times (May 4, 1998).
---------------------------------------------------------------------------
``Rules of Congress, Truth Be Damned'' 317
---------------------------------------------------------------------------
\317\ Robert Scheer, Los Angeles Times (May 5, 1998).
---------------------------------------------------------------------------
``It's Time to Say, `Bye-Bye, Rep. Burton' ''
318
---------------------------------------------------------------------------
\318\ Marianne Means, Fort Worth Star-Telegram (May 6, 1998).
---------------------------------------------------------------------------
``He Takes a Cue from McCarthy'' 319
---------------------------------------------------------------------------
\319\ Sandy Grady, Newark Star-Ledger (May 6, 1998).
---------------------------------------------------------------------------
``The Republicans' Loose Cannon'' 320
---------------------------------------------------------------------------
\320\ John Farmer, Newark Star-Ledger (May 7, 1998).
---------------------------------------------------------------------------
``Accuser Caught In His Own Trap'' 321
---------------------------------------------------------------------------
\321\ Stephen Winn, Kansas City Star (May 9, 1998).
---------------------------------------------------------------------------
``You Want a Non-Partisan Investigation? Don't Get
Burton'' 322
---------------------------------------------------------------------------
\322\ Robert G. Beckel, Los Angeles Times (May 10, 1998).
---------------------------------------------------------------------------
``Another Bump In Burton Panel's Road''
323
---------------------------------------------------------------------------
\323\ Norman Ornstein, Washington Post (May 13, 1998).
---------------------------------------------------------------------------
``Housebroken'' 324
---------------------------------------------------------------------------
\324\ David Grann, The New Republic (May 18, 1998).
---------------------------------------------------------------------------
II. The Majority Repeatedly Made Sensational Allegations That Were
False or Unsubstantiated
On February 25, 1997, at the outset of the Committee's
investigation, Chairman Burton appeared on national television
to discuss the Committee's campaign finance investigation.
During the interview, he noted that ``this thing could end up
being much bigger than Watergate ever was.'' 325 He
reiterated this allegation to the Washington Post a few weeks
later, stating: ``This could end up being a Watergate type of
thing. . . . This is big, big stuff. Every day it's getting
bigger and bigger.'' 326
---------------------------------------------------------------------------
\325\ PBS's The NewsHour with Jim Lehrer (Feb. 25, 1997).
\326\ ``Pit Bull'' in the Chair; Rep. Burton Known as Tenacious
Crusader, Washington Post (Mar. 19, 1997).
---------------------------------------------------------------------------
The Chairman's accusations generated headlines but were
never substantiated. Over a year later, after hundreds of
subpoenas and depositions, a senior Republican leadership aide
had this to say about the Committee's investigation: ``It's
been very expensive, and it hasn't amounted tomuch.''
327 Similarly, the Wall Street Journal reported: ``the panel
. . . has conducted just a handful of hearings that disclosed no major
new evidence against the White House.'' 328
---------------------------------------------------------------------------
\327\ Burton's Request for Funds Stalls as Investigation Fatigue
Hits GOP, CQ's Inside Congress (Mar. 21, 1998).
\328\ Burton's Campaign-Finance Probe Is Drawing Criticism for
Mounting Costs and Slow Progress, Wall Street Journal (Mar. 27, 1998).
---------------------------------------------------------------------------
Unfortunately, the pattern of ``accuse first, investigate
later'' became a hallmark of the Committee's investigation. As
one editorial observed, Chairman Burton has ``variously accused
the President of lying, covering up, obstructing justice and
buying off witnesses--and proved not a one of his
accusations.'' 329
---------------------------------------------------------------------------
\329\ Chairman's Rampage Demeans Entire House, Fayetteville
Observer-Times (May 6, 1998).
---------------------------------------------------------------------------
This tactic may have succeeded as a partisan political
strategy. The majority's unsubstantiated allegations regularly
received more media coverage than the actual facts. But as
responsible congressional oversight, the approach was
fundamentally flawed. It was unfair to those whose reputations
were falsely maligned, misleading to the public, and a
discredit to the House.
A. John Huang Did Not ``Launder Money'' through David Wang
The Committee's first campaign finance hearing, held on
October 9, 1997, was based on an unsubstantiated allegation.
The star witness at that hearing was supposed to be David Wang,
a used car salesman from Southern California. The majority
alleged that Mr. Wang's testimony would prove that DNC
fundraiser John Huang had met with Mr. Wang in Los Angeles on
August 16, 1996, to solicit and receive conduit contributions
from Mr. Wang. Before the hearing, Chairman Burton claimed:
``This is the first time we have found an active person at the
DNC who was involved in money laundering. So Mr. Huang, while
he was an executive at the DNC in the finance area, was
laundering money and we will be able to prove that.''
330 In his opening statement, Chairman Burton stated
that Mr. Wang's testimony was ``the first time in my memory
that we have seen evidence of such blatantly illegal activity
by a senior national party official.'' 331
---------------------------------------------------------------------------
\330\ Burton Says Testimony Will Show Illegal Donation, Associated
Press (Sept. 27, 1997).
\331\ House Committee on Government Reform and Oversight, Hearings
on Conduit Payments to the Democratic National Committee, 105th
Congress, 1st Sess., 7 (Oct. 9, 1997).
---------------------------------------------------------------------------
These allegations, however, turned out to be false. Using
evidence submitted to the Committee, as well as information
available in the public record, a minority staff report
demonstrated that the Chairman's allegations were untrue.
332 Mr. Huang's credit card records showed that Mr.
Huang was in New York--not Los Angeles--on the day that Mr.
Wang made the conduit contributions and allegedly met with John
Huang. Moreover, affidavits and statements from witnesses who
met and worked with Mr. Huang demonstrated that he was in New
York during the period in question, including on the specific
day Mr. Wang claimed to have met with Mr. Huang in Los Angeles.
---------------------------------------------------------------------------
\332\ Minority Staff Report, Committee on Government Reform and
Oversight, Evidence that John Huang Was in New York City on August 15,
16, 17, and 18 (Oct. 9, 1997).
---------------------------------------------------------------------------
Remarkably, the hearing was held even though the majority
had received advance notice of the problems with Mr. Wang's
testimony. Majority chief counsel Richard Bennett admitted
during his questioning of Mr. Wang that ``the day after your
deposition, I was visited by John Huang's attorney . . . who
insisted that his client was not with you in California on that
particular day.'' 333 Chairman Burton and his staff,
however, never investigated this exculpatory evidence. Nor has
Chairman Burton retracted the allegation, clarified the public
record, or apologized for his mistakes.
---------------------------------------------------------------------------
\333\ House Committee on Government Reform and Oversight, Hearings
on Conduit Payments to the Democratic National Committee, 105th
Congress, 1st Sess., 257 (Oct. 9, 1997).
---------------------------------------------------------------------------
B. The White House Videotapes Were Not ``Cut Off Intentionally'' or
``Altered''
Less than a month later, Chairman Burton appeared as a
guest on CBS's ``Face the Nation'' to accuse the White House of
doctoring videotapes of White House coffees and other events.
Chairman Burton stated: ``Some of the tapes were cut off very
abruptly and then you go to another tape. We think . . . maybe
some of those tapes may have been cut off intentionally,
they've been--been, you know, altered in some way.''
334
---------------------------------------------------------------------------
\334\ CBS's Face the Nation (Oct. 19, 1997).
---------------------------------------------------------------------------
Chairman Burton's allegation of tape alteration received
substantial press coverage in the days following his
appearance. Articles about his allegation appeared in the
Washington Post,335 the Los Angeles
Times,336 and in wire stories.337
However, the allegation ultimately proved to be baseless.
Investigations by both this Committee and the Senate
Governmental Affairs Committee failed to produce any evidence
of tape alteration. In fact, the investigations produced
compelling evidence that the tapes had not been altered in any
way.
---------------------------------------------------------------------------
\335\ Tapes May Have Been Altered, Rep. Burton Says, Washington
Post (Oct. 20, 1997).
\336\ Altering of Clinton Tapes Alleged, Los Angeles Times (Oct.
20, 1997).
\337\ Carter Says Fund-Raising Back and Forth Are Hurting Country,
Associated Press (Oct. 19, 1997).
---------------------------------------------------------------------------
For example, on October 23, 1997, Chief Petty Officer
Charles McGrath, the career military officer in charge of the
White House Communications Agency (WHCA) Audiovisual Unit,
engaged in the following dialogue with Senator Levin at a
Senate hearing:
Mr. Levin. Now, the allegation has been made here
that these tapes have been altered in some way. Have
they been?
Mr. McGrath. Not at all.
Mr. Levin. Well, we had Congressman Burton here make
this allegation on Face the Nation last Sunday. Did you
hear that allegation?
Mr. McGrath. I did not see that, but I did hear that
he made the allegation.
Mr. Levin. And you know that it's not true?
Mr. McGrath. I know that for a fact.\338\
---------------------------------------------------------------------------
\338\ Hearing before Senate Committee on Governmental Affairs (Oct.
23, 1997).
Mr. McGrath's testimony before the Senate was echoed by
other witnesses who testified before this Committee. For
example, Steven Smith, a career Defense Department employee who
worked in WHCA, was asked: ``And you also said that you knew of
no instance during your time where a tape was altered,
doctored, edited, whatever words you want to use?'' He replied,
``That's correct.'' \339\ Similarly, Colonel Joseph Simmons
(Ret.), the commander of the career military employees at WHCA,
testified as follows:
---------------------------------------------------------------------------
\339\ Deposition of Steven Smith, House Committee on Government
Reform and Oversight, 99 (Oct. 18, 1997). All depositions referenced in
this section, unless otherwise noted, were taken by the House Committee
on Government Reform and Oversight.
Minority Counsel. Are you aware of any effort by any
White House personnel to doctor or alter the tapes?
Mr. Simmons. No.
Minority Counsel. Do you believe that your men would
have [per]mitted such an effort to take place or
succeed, had they become aware of it?
Mr. Simmons. Absolutely not.
Minority Counsel. Do you believe they would have
informed you . . . of any efforts to doctor, alter, or
otherwise edit the tapes?
Mr. Simmons. I know they would have.\340\
\340\ Deposition of Joseph Simmons, 149 (Oct. 18, 1997.)
The Senate Committee even hired an independent expert, Paul
Ginsburg, to review the videotapes. This expert also
``determined . . . that there was no suspicious trickery.''
\341\
---------------------------------------------------------------------------
\341\ Burton's Hearings Resume Where Thompson's Ended, Roll Call
(Nov. 6, 1997) (quoting a ``Senate GOP source''). See also Expert:
Coffee Tapes Are Clean, Newsday (Nov. 8, 1997) (``Paul Ginsburg, an
expert hired by the Senate Governmental Affairs Committee to study the
tapes for signs of doctoring, has `found no evidence of improper
alteration,' a committee staffer said.'').
---------------------------------------------------------------------------
Ultimately, the evidence that the videotapes were not
altered received far less attention than Chairman Burton's
initial allegations. Ranking Minority Member Waxman pointed
this out at a hearing on November 6, 1997, and requested that
Chairman Burton at least acknowledge his mistake and correct
the public record.\342\ Chairman Burton has refused to retract
this false accusation.
---------------------------------------------------------------------------
\342\ House Committee on Government Reform and Oversight, Hearings
on White House Compliance With Committee Subpoenas, 105th Cong., 1st
Sess., 43 (Nov. 6, 1997). As noted by the Hartford Courant, ``The
Chairman of the House committee probing possible campaign finance
abuses Thursday offered no proof to protesting Democrats of his
allegation that White House coffee videotapes had been altered.'' No
Proof Offered of Tape Tampering, Hartford Courant (Nov. 7, 1997).
---------------------------------------------------------------------------
C. The Hudson Casino Decision Was Not a ``Political Payoff''
In late 1997, the Committee commenced an extensive
investigation into whether a decision by the Department of the
Interior to deny an off-reservation Indian casino application
was influenced by contributions made to the DNC by local tribes
opposed to the application. Committee investigators took 18
depositions regarding the decision, including the depositions
of ten Interior Department employees involved in the
decision.\343\ Although these depositions established that the
decision was based on the merits--and not the influence of
campaign contributions--Chairman Burton and other Republican
members persisted in making unsubstantiated, but widely
reported, allegations of political corruption during four days
of Committee hearings in January 1998.\344\
---------------------------------------------------------------------------
\343\ The Interior Department employees deposed were: Michael
Anderson (Jan. 14, 1998); Michael Chapman (Jan. 9, 1998); Ada Deer
(Jan. 12, 1998); John Duffy (Jan. 26, 1998); Tom Hartman (Dec. 8,
1997); Robert Jaeger (Dec. 11, 1997); Hilda Manuel (Jan. 6, 1998);
Kevin Meisner (Jan. 16, 1998); Heather Sibbison (Jan. 15, 1998); and
George Skibine (Jan. 13-14, 1998). The other individuals deposed
concerning the Hudson decision were: Loretta Avent (Dec. 5, 1997);
Thomas Corcoran (Dec. 10, 1997); Franklin Ducheneaux (Dec. 4, 1997);
Ann Jablonski (Jan. 20, 1998); Jennifer O'Connor (Sept. 15, 1997);
Patrick O'Donnell (Dec. 9 1997); Michael Schmidt (Jan. 8, 1998); and
Tom Schneider (Dec. 10, 1997).
\344\ House Committee on Government Reform and Oversight, Hearings
on the Department of the Interior's Denial of the Wisconsin Chippewa's
Casino Applications, 105th Cong., 2d Sess. (Jan. 21, 22, 28, and 29,
1998).
---------------------------------------------------------------------------
Chairman Burton, for example, alleged that the Department's
decision was a ``political payoff.'' He summarized his core
allegations during the first day of the Committee's hearings as
follows:
$350,000 was given, which appears to be a political
payoff; and then after that Mr. Duffy and Mr. Collier,
two top executives at the Interior, go to work for the
rich tribe. And then after that, Mr. Collier carries a
$50 to $100,000 check to the DNC from the Shakopees.
Now I don't know how anybody, even if they are blind,
could not see these facts. . . . What we are talking
about is whether or not the law was complied with, No.
1, whether or not campaign contributions were used to
exert influence on people in the White House and at the
Department of [the] Interior to kill this project. I
think it is pretty clear, at least from my perspective
it is pretty clear, that that's what happened.\345\
---------------------------------------------------------------------------
\345\ Id. at v. 1, 106.
The Chairman's allegations were echoed by other Committee
Republicans, who claimed that the tribes contributing to the
DNC were ``successfully buying influence'' \346\ and that
``[t]his is an inquiry into whether corruption went to the
highest levels of this Government.'' \347\
---------------------------------------------------------------------------
\346\ Id. at v. 1, 164 (Statement of Rep. Souder).
\347\ Id. at v. 1, 195 (Statement of Rep. Shadegg).
---------------------------------------------------------------------------
These allegations, however, were not supported by the
evidence. The evidence showed that the Department had sound
reasons for rejecting the casino application. Approval of the
application would have permitted the federal government to
remove the land from local control for the benefit of distant
Indian tribes. Not surprisingly, local officials from the
Hudson town council to Wisconsin Republican Governor Tommy
Thompson opposed such a move, as did the local congressman,
Republican Rep. Steve Gunderson.\348\ Also, the land would have
been used for casino gambling, which is illegal under Wisconsin
law. In essence, the application would have allowed distant
Indian tribes to impose casino gambling on an unwilling
locality.\349\
---------------------------------------------------------------------------
\348\ See Resolution opposing casino gambling at St. Croix Meadows,
Resolution No. 2-95 (Feb. 6, 1995); Letter from 29 Wisconsin state
legislators to Secretary Babbitt (Mar. 28, 1995); Letter from Rep.
Steve Gunderson to Secretary Babbitt (Apr. 28, 1995); Letter from Sen.
Russ Feingold to Secretary Babbitt (June 29, 1995); Letter from Gov.
Tommy Thompson to William Cranmer (June 9, 1995).
\349\ The proposed casino also would have increased parking
congestion in the area and impacted a nearby scenic riverway. See House
Committee on Government Reform and Oversight, Hearings on The
Department of the Interior's Denial of the Wisconsin Chippewa's Casino
Applications, 105th Cong., 2d Sess. (Jan. 21, 22, 28, and 29, 1998), v.
1, 356; 396.
---------------------------------------------------------------------------
These facts led some Republican Committee members to
concede that the decision was correct on the merits. Rep.
Christopher Cox, for example, acknowledged that ``if I were
making the decision with a view to vindicating the interests of
the community that I represented, I might have gone the same
way. I might have said no dog track.'' \350\ Other Republican
members also expressed their opposition to casino
gambling.\351\
---------------------------------------------------------------------------
\350\ Id. at v. 1, 16.
\351\ Rep. Mark Souder: ``I believe gambling is a mortal sin, and I
believe you're wrong to pursue the casinos . . . And I don't like this
manipulation of going off the reservations.'' Id. at v. 1, 96. Rep.
John Mica: ``I don't support casino gambling.'' Id. at v. 1, 158. Rep.
Vince Snowbarger: ``I am no proponent of gambling.'' Id. at v. 1, 174.
Rep. John Shadegg: ``I have grave reservations about Indian gaming.''
Id. at v. 1, 178.
---------------------------------------------------------------------------
Indeed, the majority's frequently stated opposition to
gambling led Rep. Robert Wise to observe that the opposite
decision would have subjected the Department to a firestorm of
criticism:
[H]ad you ruled the opposite way in the face of
intense opposition from the State house on down in
Wisconsin, basically Republican, much of it Republican
dominated . . . we would be here today . . . conducting
the same hearing, but it would be reversed. It would be
. . . Why did you ignore the overwhelming local
opposition in Wisconsin? \352\
---------------------------------------------------------------------------
\352\ Id. at v. 1, 863.
Moreover, the evidence showed that the decision to reject
the application was made exclusively on the merits. Every
Department employee who testified before the Committee denied
that the Department's decision had been influenced--directly or
indirectly--by campaign contributions. George Skibine, the
career civil servant who recommended that the application be
---------------------------------------------------------------------------
rejected, categorically denied the majority's allegations:
I was not pressured in any way by anyone to reach a
particular recommendation in this matter. You may
choose to question the wisdom of my professional
judgment in this matter, and reasonable people may
disagree on the merits of my recommendation; however,
it was made solely on the merits. Throughout this
investigation I have always tried to tell the truth as
I know it. I am a civil servant of two decades'
standing who has chosen a career in public service
because I believe it is a high calling. My integrity,
honesty, and good faith have never before been
challenged.\353\
---------------------------------------------------------------------------
\353\ Id. at v. 1, 205.
Hilda Manuel, deputy commissioner of the Bureau of Indian
Affairs and Mr. Skibine'ssupervisor, also denied that any
improper influence had been brought to bear on the Department:
Minority Counsel. Were you ever contacted by the
White House or the DNC about this project, the Hudson
project?
Ms. Manuel. Never.
Minority Counsel. And at the time of the decision,
did you feel like the White House or the DNC tried to
improperly influence the outcome?
Ms. Manuel. No.
Minority Counsel. Do you think the decision was based
on the record?
Ms. Manuel. Yes.354
---------------------------------------------------------------------------
\354\ Deposition of Hilda Manuel, 98 (Jan. 6, 1998).
Similarly, Deputy Assistant Secretary Michael Anderson, the
final decision maker, testified that ``I have absolutely no
knowledge of any improper political influence or even, for that
matter, from the DNC any rumors or suggestions that there was
political corruption going on in this decision.''
355
---------------------------------------------------------------------------
\355\ House Committee on Government Reform and Oversight, Hearings
on the Department of the Interior's Denial of the Wisconsin Chippewa's
Casino Applications, 105th Cong., 2d Sess. (Jan. 21, 22, 28, and 29,
1998), v. 1, 369.
---------------------------------------------------------------------------
In addition, the majority was never able to establish any
connection between the Department's decision and subsequent
legal work done by two senior Department employees for the
tribes opposed to the application. One of those employees, Tom
Collier, testified that he was not even working at the
Department at the time the decision was made:
I want to reiterate that there is no connection
whatsoever to any work I ever did at the Department of
the Interior and my representation of the Shakopees. .
. . I was not involved in this decision at the
Department of [the] Interior. I had left the Department
when this decision was made.356
\356\ Id. at v. 1, 721. The other employee, John Duffy, similarly
denied any connection between the decision and his subsequent work. He
noted that he played no role whatsoever in seeking out the opposing
tribe as clients: ``Let me make sure we understand this. I am not
working on any issue for the Shakopees that I worked on at the
Department of [the] Interior. . . . I mean, the connection that is
trying to be made here, with improper conduct on my part, which I
frankly am strongly upset about, is that I joined a law firm which
already had a client, which, at some point in time, was interested in a
decision that I participated in but didn't make. Now, with great
respect, Congressman, I don't see the appearance of impropriety here.''
Id. at v. 1, 760.
At the conclusion of the third day of hearings, it was
apparent that the evidence before the Committee fundamentally
conflicted with the majority's allegations.357
Rather than acknowledging this conflict, however, Chairman
Burton continued to assert that the Department's decision
``stinks'' and ``smells'' based on the circumstantial evidence
that the decision favored the tribes that had made
contributions to the DNC.358
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\357\ The principal testimony supporting the majority's allegations
was the testimony of Fred Havenick, the owner of the proposed casino
site. Mr. Havenick was the prime mover behind the casino application
because he believed a casino would salvage a failed dog track he had
built at the site, an investment that was incurring multi-million
dollar losses annually. Mr. Havenick alleged that at a meeting with Mr.
Skibine, Mr. Skibine had explained that the application was killed
because of ``politics.'' Mr. Havenick's allegation was supported by
affidavits from two officials of the disgruntled applicant tribes. Mr.
Havenick also alleged that at a Democratic fundraising event, Terry
McAuliffe, a prominent Democratic fundraiser, had boasted that he had
killed the application.
There was considerable evidence that conflicted with Mr. Havenick's
testimony, however. First, Mr. Skibine vehemently denied saying that
the application was killed because of ``politics,'' and his denial was
supported by the affidavits of five Interior Department employees who
attended the meeting. Similarly, Mr. McAuliffe submitted a statement to
the Committee denying Mr. Havenick's allegation. Statement of Terence
McAuliffe (Jan. 28, 1998). Moreover, the Committee's hearing was the
first time Mr. Havenick made his allegation against Mr. McAuliffe,
despite having litigated the Department's decision for more than two
years on the basis of improper political influence. As Rep. Kucinich
noted, ``I find it very unusual that this story about Mr. McAuliffe
surfaces today even though it never came up in what can only be
described as very contentious litigation with the Department.'' House
Committee on Government Reform and Oversight, Hearings on the
Department of the Interior's Denial of the Wisconsin Chippewa's Casino
Applications, 105th Cong., 2d Sess. (Jan. 21, 22, 28, and 29, 1998), v.
1, 173.
\358\ Id. at v. 1, 340.
---------------------------------------------------------------------------
On February 11, 1998, Attorney General Reno recommended
that an independent counsel be appointed to investigate
possible false statements to Congress by Secretary Babbitt
relating to the Hudson casino decision. While the appointment
of an independent counsel is a serious matter, the Attorney
General's recommendation does not substantiate the majority's
allegations. In fact, in the independent counsel application,
Attorney General Reno stated that she ``did not have specific
and credible evidence to suggest that Secretary Babbitt had
participated in any criminal activity to corrupt the decision
making process.'' 359 The independent counsel was
appointed solely to investigate the truthfulness of Secretary
Babbitt's statements concerning a meeting he had with a
lobbyist on the Hudson casino application.360
---------------------------------------------------------------------------
\359\ See Application to the Court Pursuant to 28 U.S.C.
Sec. 592(e)(1) for the Appointment of an Independent Counsel, 8 (Feb.
11, 1998).
\360\ Id. at 2. The controversy involved the conflicting testimony
of Secretary Babbitt and Paul Eckstein, a lobbyist working for the
applicant tribes. According to Mr. Eckstein, Mr. Babbitt told Mr.
Eckstein that then-White House Deputy Chief of Staff Harold Ickes had
called Mr. Babbitt and directed him to make a decision on the casino
application. In a July 14, 1995, letter to Senator McCain, Secretary
Babbitt denied telling Mr. Eckstein that he had spoken to Mr. Ickes.
Secretary Babbitt later testified that he did not tell Mr. Eckstein
that Mr. Ickes told him to make a decision. In his testimony before the
Committee, Secretary Babbitt said that he told Mr. Eckstein that ``Mr.
Ickes, the Department's point of contact on many Interior matters,
wanted or expected the Department to decide the matter promptly.'' Mr.
Babbitt explained, ``It was just an awkward effort to terminate an
uncomfortable meeting on a personally sympathetic note. But . . . I had
no such communication with Mr. Ickes or anyone else from the White
House.'' Testimony of Secretary Babbitt before the Senate Governmental
Affairs Committee (Oct. 30, 1997).
In the application for the appointment of the independent counsel,
Attorney General Reno did not reach a conclusion on whether Mr. Babbitt
made a false statement. She noted, ``It must be decided by an
Independent Counsel whether the evidence of falsity . . . is sufficient
to prove beyond a reasonable doubt that Secretary Babbitt's testimony
was untrue, and if so, whether prosecution is warranted as an exercise
of discretion.'' Application to the Court Pursuant to 28 U.S.C.
Sec. 592(e)(1) for the Appointment of an Independent Counsel, at 5. In
fact, the Attorney General found ``evidence suggesting that Secretary
Babbitt lacked criminal intent'' when he made those statements. Id. at
7.
---------------------------------------------------------------------------
D. There Is No Evidence That the President Created a National Monument
in Utah ``in Exchange for Money from Indonesia's Lippo Group''
Chairman Burton also alleged that President Clinton created
a national monument in Utah in order to benefit the Lippo
Group. For example, on April 16, 1998, the Indianapolis Star
reported: ``Although he is not yet able to prove his
suspicions, Burton's chief concern is that U.S. policies were
compromised in exchange for campaign contributions. Among the
possibilities: that Clinton declared 1.8 million acres of coal-
rich southern Utah as a national park in exchange for money
from Indonesia's Lippo Group. Indonesia is the chief competitor
to Utah for low-polluting coal.'' 361
---------------------------------------------------------------------------
\361\ Burton's Pursuit of President, Indianapolis Star (Apr. 16,
1998).
---------------------------------------------------------------------------
On June 11, 1998, Chairman Burton restated his allegation
on the House floor:
Who would benefit from turning that into a national
park so you cannot mine there? The Riady group, the
Lippo Group, and Indonesia has the largest clean-
burning coal facility, in southeast Asia. They were one
of the largest contributors. . . . Could there be a
connection there? We need to know. The American people
have a right to know, but we do not know.362
---------------------------------------------------------------------------
\362\ Congressional Record, H4544 (June 11, 1998).
After nearly two years of investigation, however, the
Committee has produced no evidence supporting the Chairman's
allegations. To the contrary, as the Washington Times has
reported, ``hundreds of pages of administration documents
turned over to congressional investigators show no Lippo
connection.'' 363
---------------------------------------------------------------------------
\363\ Congress Checks Lippo Link to ``Clean Coal'' Closure,
Washington Times (July 24, 1997).
---------------------------------------------------------------------------
E. The Hubbell Tapes Did Not Show a ``Payoff'' to Webster Hubbell
On April 30, 1998, Chairman Burton unilaterally released
tapes of Webster Hubbell's prison conversations. According to
the Chairman, these tapes proved that Mr. Hubbell had been paid
to protect the President and the First Lady. Appearing on NBC's
``Meet the Press,'' Chairman Burton alleged that the tapes
showed that ``it appears to be a payoff--it looks like the
White House was trying to keep Webb Hubbell quiet and they've
been successful.'' 364
---------------------------------------------------------------------------
\364\ NBC's Meet the Press (May 3, 1998).
---------------------------------------------------------------------------
It was subsequently revealed, however, that the tape
transcripts released by Chairman Burton omitted exculpatory
statements by Mr. Hubbell that contradicted the Chairman's
allegation. For example, Chairman Burton omitted a passage
where Mr. Hubbell tells his wife that ``most of the articles
are presupposing that . . . my silence is being bought. We know
that's not true.'' 365
---------------------------------------------------------------------------
\365\ Production from the Department of Justice to the House
Committee on Government Reform and Oversight, Tape 100A (July 2, 1997).
---------------------------------------------------------------------------
Moreover, the Chairman's allegation of a ``payoff'' was not
supported by the evidence before the Committee. The majority
devoted a substantial portion of the Committee's investigative
resources to examining, in exhaustive detail, Mr. Hubbell's
activities. Although there was little apparent connection to
campaign finance issues, the majority investigated numerous
subjects relating to Mr. Hubbell, including: Mr. Hubbell's
discussions in 1993 with partners at the Rose Law
Firm,366 whether Mr. Hubbell maintained documents
relating to the ``Whitewater'' land deal,367 whether
there were discussions at the White House about subpoenas from
Independent Counsels Robert Fiske or Kenneth Starr to Mr.
Hubbell,368 whether persons close to the President
hired Mr. Hubbell in 1994 to obstruct Independent Counsel
Starr's investigation,369 what income Mr. Hubbell
reported on his tax returns,370 the circumstances
surrounding Mr. Hubbell's resignation from the Department of
Justice,371 contacts with Mr. Hubbell after his
resignation from the Department of Justice,372
contacts with Mr. Hubbell while he was
incarcerated,373 contacts with Mr. Hubbell's wife
while Mr. Hubbell was incarcerated,374 the trust
funds set up for Mr. Hubbell's children and legal expenses when
he went to prison,375 and Mr. Hubbell's reasons for
asserting his Fifth Amendment rights.376
---------------------------------------------------------------------------
\366\ See, e.g., Deposition of Marsha Scott, 25-28 (Sept. 10,
1997).
\367\ See, e.g., Deposition of Michael Kantor, 30-31 (Aug. 8,
1997).
\368\ See, e.g., Deposition of Mack McLarty, 36, 44, 104-05 (Sept.
5, 1997).
\369\ See, e.g., Deposition of Michael Kantor, 54-55 (Aug. 8,
1997).
\370\ See, e.g., Deposition of Michael Schaufele, 88-89 (Aug. 29,
1997).
\371\ See, e.g., Deposition of James Blair, 33-42 (July 23, 1997).
\372\ See, e.g., Interrogatories from House Committee on Government
Reform and Oversight to Erskine Bowles, No. 6 (Apr. 20, 1998).
\373\ See, e.g., Interrogatories from House Committee on Government
Reform and Oversight to John Richardson, No. 28 (Dec. 8, 1997).
\374\ See, e.g., Interrogatories from House Committee on Government
Reform and Oversight to Nathan Landow, No. 16 (Apr. 1, 1998).
\375\ See, e.g., Deposition of Michael Schaufele, 51-66 (Aug. 29,
1997).
\376\ See, e.g., Id. at 67-68 (Aug. 29, 1997).
---------------------------------------------------------------------------
In investigating these various topics, the majority deposed
42 people, took testimony through written interrogatories from
17 others, and requested documents from 96 companies and
individuals. This extensive record shows that the witnesses who
hired Mr. Hubbell did so because they had legitimate work for
him to do,377 because he had valuable connections in
the government,378 or out of compassion for a friend
379--not as a ``payoff'' to obstruct justice. In
fact, there is so little evidence of a ``payoff'' that the
majority report is completely silent on this issue and the
majority never held a single day of hearings on Mr. Hubbell.
---------------------------------------------------------------------------
\377\ See, e.g., Deposition of Bernard Rapoport, 41, 49-50, Ex. 7
(Aug. 19, 1997) (testifying that Mr. Hubbell was hired to lobby and
consult and that Mr. Hubbell, in fact, did legitimate work).
\378\ See, e.g., Deposition of Jim Lewin, 34-50 (Aug. 21, 1997)
(testifying that U.S. Sprint hired Mr. Hubbell because he was a highly
connected individual who could help counter AT&T in lobbying).
\379\ See, e.g., Deposition of John Phillips, 43-53 (July 31, 1997)
(testifying that he was a close friend of Mr. Hubbell and helped him
obtain a grant).
---------------------------------------------------------------------------
During his appearance on ``Meet the Press'' on May 3, 1998,
Chairman Burton also alleged that a taped discussion between
Mr. Hubbell and his attorney about ``a move that moots
everything'' indicated that the President was considering a
presidential pardon for Mr. Hubbell. According to Chairman
Burton, the taped conversation ``means that they thought the
president might pardon Webb Hubbell right after the election
and get him off the hook.'' This assertion also proved to be
completely erroneous. On May 3, 1998, Mr. Hubbell's attorney,
John Nields, appeared on ABC's ``This Week'' and explained that
the conversation related to obtaining a grant of immunity from
the Independent Counsel's office, which ultimately did
happen.380
---------------------------------------------------------------------------
\380\ ABC's This Week (May 3, 1998).
---------------------------------------------------------------------------
Rather than acknowledging that his allegations could not be
substantiated, Chairman Burton actually claimed that the public
criticism caused by the release of the doctored transcripts
validated his allegations of wrongdoing. As he put it, ``When
you hear the other side squealing like a bunch of pigs, then
you understand you're getting somewhere near the truth.''
381
---------------------------------------------------------------------------
\381\ CNN's Inside Politics (May 4, 1998).
---------------------------------------------------------------------------
F. The Immunized Witnesses Did Not Have ``Direct Knowledge About How
the Chinese Government Made Illegal Campaign Contributions''
On April 23, 1998, Chairman Burton scheduled a Committee
meeting to seek immunity for four witnesses: Nancy Lee, Irene
Wu, Kent La, and Larry Wong. These witnesses were individuals
with varying degrees of relationship to individuals being
investigated by the Committee. Ms. Lee and Ms. Wu were former
employees of Johnny Chung. Mr. La was a business associate of
Ted Sioeng, and Mr. Wong was a former employee of Nora Lum.
Committee Democrats objected. One week before the scheduled
meeting, Chairman Burton had called the president a ``scumbag''
and said that he was ``after'' the President.382
These remarks caused the Democratic members of the Committee to
oppose immunity. As Rep. Eleanor Holmes Norton explained:
---------------------------------------------------------------------------
\382\ Burton's Pursuit of President, Indianapolis Star (Apr. 16,
1998).
I regret and protest that I have been forced to vote
against immunity in order to protest rank unfairness in
this committee. I have been driven, as has every Member
on my side been driven, to vote against what they
wanted to vote for.383
---------------------------------------------------------------------------
\383\ House Committee on Government Reform and Oversight, Business
Meeting (Apr. 23, 1998).
Moreover, several Committee members expressed concern that
the Committee had not obtained proffers from the witnesses
explaining what their testimony might be if granted immunity.
Rep. Paul Kanjorski observed, ``The Chair should have provided
written proffers so that we could accurately ascertain whether
the information to be derived by these witnesses is reasonable
in terms of offering immunity.'' 384
---------------------------------------------------------------------------
\384\ Id.
---------------------------------------------------------------------------
Finally, Committee Democrats noted that Chairman Burton had
not yet responded to their letter of October 22, 1997, asking
for changes in the Committee's approach to
immunity.385 That letter was written shortly after
the Committee's October 9, 1997, hearing where the Committee
had given a witness (David Wang) immunity for tax and
immigration fraud in return for demonstrably false testimony.
In the letter, Committee Democrats asked that the Chairman's
unilateral powers be returned to the Committee before any
additional witnesses were granted immunity.
---------------------------------------------------------------------------
\385\ Letter from Rep. Waxman to Chairman Burton (Oct. 22, 1997).
---------------------------------------------------------------------------
Chairman Burton and many other Republican members and
leaders responded to the minority's reluctance to support
immunity by accusing the Democratic Committee members of
obstructing the Committee's investigation. According to
Republicans, Democrats voted against immunity to prevent the
four witnesses from providing essential information about
Chinese influence in the 1996 Presidential campaign. In a floor
statement, Speaker Gingrich alleged that:
[A]t a time when the American people could have
learned the truth from eyewitnesses who participated in
laundering foreign illegal money, a threat to the
entire fabric of our political system, for some reason
the Democrats voted 19-0 against allowing immunity.
That means they voted 19-0 to cover up this testimony,
to block it from getting to the American people, and to
prevent the Congress from being informed.386
---------------------------------------------------------------------------
\386\ Congressional Record, H2336 (Apr. 28, 1998).
To support their claims of Democratic obstruction,
Republican members of Congress repeatedly emphasized the
importance of the four witnesses. For example, Rep. John
Boehner, Republican Conference Chair, stated that the witnesses
``have direct knowledge about how the Chinese government made
illegal campaign contributions in an apparent attempt to
influence our foreign policy'' and opined that granting
immunity ``is about determining whether American lives have
been put at risk.'' 387 Similarly, Committee
Republican Rep. Steven Horn expressed his belief that
immunization of the four witnesses was ``absolutely
essential.'' 388 Chairman Burton stated that the
witnesses would be ``very knowledgeable'' about contributions
made by Nora and Gene Lum 389 and would ``shed the
light'' on the activities of Johnny Chung and Ted
Sioeng.390
---------------------------------------------------------------------------
\387\ Congressional Record, H3453 (May 19, 1998).
\388\ Rep. Horn, House Committee on Government Reform and
Oversight, Business Meeting (May 13, 1998).
\389\ Opening Statement by Chairman Burton, House Committee on
Government Reform and Oversight, Business Meeting (Apr. 23, 1998).
\390\ Id.
---------------------------------------------------------------------------
All of these allegations turned out to be wrong. On June
23, 1998, after Chairman Burton agreed to some changes to the
Committee rules relating to subpoenas, document release, and
depositions, the Democratic members agreed to support immunity
for the four witnesses. The testimony that the Committee
subsequently obtained from the witnesses showed that they had
no knowledge--direct or indirect--about illegal Chinese
campaign contributions.391
---------------------------------------------------------------------------
\391\ The four witnesses were not the first witnesses given
immunity by the Committee who had little or no information to
contribute to the Committee's investigation. The Committee's first
hearing featured two immunized witnesses, Manlin Foung and Joseph
Landon, who testified to being unwittingly involved in making conduit
contributions to the DNC. Those conduit contributions had been
disclosed by the DNC to the Justice Department seven weeks before the
hearing. Minority staff interview with Judah Best (Sept. 18, 1997). Ms.
Foung, who is Charlie Trie's sister, had no knowledge about her
brother's businesses, political activities, or contacts with the
Chinese government. Mr. Landon made his contribution at Ms. Foung's
request, and had no other relevant information to share with the
Committee.
---------------------------------------------------------------------------
For example, during the deposition of Nancy Lee, the
Committee learned that for most of Ms. Lee's tenure as an
employee of Mr. Chung's company, she worked part-time between
the hours of 9:00 p.m. and 12 midnight and rarely saw Mr.
Chung.392 Ms. Lee's lack of knowledge about Johnny
Chung's political activities was demonstrated during the
minority counsel's questioning:
---------------------------------------------------------------------------
\392\ Deposition of Nancy Lee, 68 (July 29, 1998).
Minority Counsel. Your lawyer said that you had no
knowledge about Johnny Chung's source of funds, where
he got his money from. Is that true?
Ms. Lee. Yes.
* * * * *
Minority Counsel. And that you don't--do you know
about whether Johnny Chung got any money from any
citizen of China or any business from China for a
political contribution here in the United States?
Ms. Lee. I don't know.
Minority Counsel. Do you know whether there was any
plan by the Chinese government to influence the 1996
American election? Do you know anything about that?
Ms. Lee. No idea.393
---------------------------------------------------------------------------
\393\ Id. at 54-55.
Similarly, Irene Wu had no ``direct knowledge''--or even
indirect knowledge--regarding any Chinese efforts to influence
the 1996 elections. She did not provide the Committee with any
information on whether Johnny Chung received money from the
Chinese government, whether there was a Chinese plan to
influence the 1996 elections, or whether Mr. Chung received any
money from Chinese businesses unrelated to legitimate business
---------------------------------------------------------------------------
transactions. In fact, she testified as follows:
Minority Counsel. Do you have any knowledge whether
the Chinese government ever reimbursed Johnny Chung for
a political contribution?
Ms. Wu. I don't.
* * * * *
Minority Counsel. Do you know whether Johnny Chung
ever received any money from any Chinese citizen or
business in order to make a political contribution?
Ms. Wu. I don't know.
* * * * *
Minority Counsel. Do you know whether there was a
plan by the Chinese government to influence the 1996
American election through political contributions?
Ms. Wu. I don't know.394
---------------------------------------------------------------------------
\394\ Deposition of Irene Wu, 86-88 (July 28, 1998).
Republican allegations concerning Larry Wong's knowledge
also proved to be baseless. At an April 23, 1998, Committee
meeting, Rep. John Shadegg stated that Larry Wong ``is believed
to have relevant information regarding the conduit for
contributions made by the Lums and others in the 1992 fund-
raising by John Huang and James Riady.'' 395 The
reality, however, was that Mr. Wong's primary responsibilities
were to register voters and serve as a volunteer cook. The sum
total of his testimony regarding James Riady is as follows:
---------------------------------------------------------------------------
\395\ Rep. Shadegg, House Committee on Government Reform and
Oversight, Business Meeting (Apr. 23, 1998). Nora and Gene Lum are
Democratic fundraisers convicted of making conduit contributions to
various Democratic campaigns. They also ran the Asian Pacific Advisory
Council, an organization supportive of the 1992 Clinton/Gore campaign,
and appear to have mishandled funds raised by that organization.
Minority Counsel. Did Nora ever discuss meeting James
Riady?
Mr. Wong. James who?
* * * * *
Minority Counsel. James Riady.
Mr. Wong. No.396
---------------------------------------------------------------------------
\396\ Deposition of Larry Wong, 85 (July 27, 1998).
Mr. Wong also provided minimal information to the Committee
concerning John Huang.397
---------------------------------------------------------------------------
\397\ Mr. Wong's testimony concerning John Huang was limited to his
knowledge that Mr. Huang was employed at the Department of Commerce,
and that he had never spoken with Nora Lum about any meetings she had
with Mr. Huang at the Department of Commerce. Id. at 102-103.
---------------------------------------------------------------------------
The last immunized witness was Kent La, a business
associate of Ted Sioeng. An agreement with the Justice
Department has prevented the Committee from releasing the
transcript of Mr. La's deposition. At a Committee hearing,
however, Rep. Waxman stated: ``The four witnesses . . . don't
know anything about transferring technology to China. They
don't know anything about possible campaign contributions from
the Chinese Government.'' 398
---------------------------------------------------------------------------
\398\ House Committee on Government Reform and Oversight, Hearing
on the Need for an Independent Counsel in the Campaign Finance
Investigation, 105th Cong., 2d Sess., 67 (Aug. 4, 1998).
---------------------------------------------------------------------------
Ironically, after insisting on the importance of the
immunized witnesses, the majority substantially delayed public
access to their testimony. At a Committee hearing on August 4,
1998, Democratic Rep. Jim Turner moved to make public the
depositions of Ms. Lee, Ms. Wu, and Mr. Wong. Chairman Burton
initially opposed this motion, stating his view that ``it is
premature to release those [depositions] right now.''
399 Shortly thereafter, he reversed himself and
agreed to release the depositions on August 14, 1998. The
depositions, however, were not released until nearly a month
later. Moreover, the majority abruptly and without explanation
canceled the hearing scheduled for September 10, 1998, at which
Ms. Wu was supposed to testify.
---------------------------------------------------------------------------
\399\ Id. at 6.
---------------------------------------------------------------------------
G. President Clinton Did Not ``Endorse'' the Candidacy of a Foreign
Leader in Exchange for Campaign Contributions
At a Committee hearing on October 8, 1997, Chairman Burton
released a ``proffer'' his staff had obtained from Nora and
Gene Lum, two Democratic fundraisers who pled guilty to
facilitating illegal conduit contributions in 1994 and 1995.
Chairman Burton alleged that if immunized, the Lums' testimony
would show that ``there was real corruption in the financing of
campaigns in this country and that this corruption may have
affected our foreign policy andpossibly our national
security.'' 400 Specifically, the Lums' proffer suggested
that during the 1992 campaign, then-candidate Clinton ``endorsed'' the
candidacy of a foreign leader in exchange for a campaign
contribution.401 This proffer was widely reported in the
press.402
---------------------------------------------------------------------------
\400\ House Committee on Government Reform and Oversight, Hearings
on Campaign Finance Improprieties and Possible Violations of Law, 105th
Cong., 1st Sess., 12 (Oct. 8, 1997).
\401\ Proffer of Nora and Gene Lum to the Committee on Government
Reform and Oversight (Aug. 22, 1997).
\402\ Story of a Foreign Donor's Deal with '92 Clinton Camp
Outlined, Washington Post (Oct. 9, 1997); Robert Novak, . . . And Next
Up, the Bean-Spillers, Washington Post (Oct. 13, 1997); Hawaiian Couple
to Get Immunity for Testimony before Burton Panel, Roll Call (Oct. 9,
1997).
---------------------------------------------------------------------------
To investigate this allegation and other allegations
involving the Lums, the Committee sent out almost 200
information requests--close to one-sixth of the total
information requests for the entire investigation. The
Committee's sprawling inquiry into the Lums resulted in the
receipt of over 40,000 pages of documents, 50 audiotapes, and a
videotape, and involved numerous depositions.
This extensive investigation, however, uncovered no
evidence to substantiate the proffer's dramatic allegations. In
fact, the investigation uncovered so little evidence to
corroborate the allegations that the majority's final report
does not even discuss the Lums. There has been no public
acknowledgment by Chairman Burton of his failure to
substantiate the well-publicized proffer.
H. The Committee Failed to Substantiate the Existence of a ``Massive
Scheme'' to Funnel Foreign Contributions into the U.S.
Perhaps the most significant allegation made during the
campaign finance investigation was the allegation that there
was a conspiracy between the Chinese government and the Clinton
Administration to violate federal campaign finance laws and
improperly influence the outcome of the 1996 presidential
election. At the outset of the investigation, Chairman Burton
raised the possibility of such a conspiracy, stating:
If the White House or anybody connected with the
White House was selling or giving information to the
Chinese in exchange for political contributions, then
we have to look into it because that's a felony, and
you're selling this country's security--economic
security or whatever to a communist
power.403
---------------------------------------------------------------------------
\403\ CNN's Late Edition with Frank Sesno (Feb. 16, 1997).
A few months later, Chairman Burton alleged the existence
---------------------------------------------------------------------------
of a ``massive'' Chinese conspiracy:
We are investigating a possible massive scheme . . .
of funneling millions of dollars in foreign money into
the U.S. electoral system. We are investigating
allegations that the Chinese government at the highest
levels decided to infiltrate our political
system.404
---------------------------------------------------------------------------
\404\ Congressional Record, H4097 (June 20, 1997).
Although the Committee's investigation veered off in many
different directions, the allegation of a Chinese conspiracy
remained the Committee's primary focus. To prove this
allegation, the Committee subpoenaed over 1.5 million pages of
documents, took hundreds of hours of depositions, and spent
millions of taxpayer dollars. None of the witnesses deposed by
the Committee, however, corroborated the existence of such a
conspiracy. In fact, as discussed above, even the witnesses who
the majority alleged would have ``direct knowledge'' of a
Chinese conspiracy, such as Irene Wu and Nancy Lee, turned out
to have no such knowledge. Not one of the over 1.5 million
pages of documents subpoenaed by the Committee provided
evidence of a Chinese conspiracy.
It is, of course, nearly impossible to prove a negative. In
this case, the minority cannot prove that there was not a
secret conspiracy between the Chinese government and the
Clinton Administration to violate federal campaign finance
laws. Nonetheless, no evidence provided to the Committee
substantiates the claim that the Administration was ``selling
or giving information to the Chinese in exchange for political
contributions.'' If there was a ``massive'' Chinese conspiracy
to influence American elections, it eluded detection by the
Committee.
I. Other Unsubstantiated Republican Allegations
There were many other unsubstantiated allegations made by
Republican leaders during the course of the Committee's
campaign finance investigation. These include:
The Allegation That the Clinton Administration Was
Selling Burial Plots in Arlington National Cemetery. In
November 1997, numerous Republican leaders drew on
unsubstantiated reports by conservative radio talk shows and
publications to accuse the Clinton Administration of selling
burial plots in Arlington National Cemetery for campaign
contributions. Speaker Gingrich, Sen. Arlen Specter, and other
Republicans called for an immediate investigation,
405 and Chairman Burton declared his intention to
investigate the matter.406 These allegations,
however, turned out to lack any foundation in fact. An
independent investigation by the GAO determined that political
contributions played no role whatsoever in the granting of
Arlington Cemetery waivers.407
---------------------------------------------------------------------------
\405\ West Denies He Broke Any Rules on Arlington Cemetery Waivers,
Washington Times (Nov. 21, 1997).
\406\ Burton to Probe Plots-for-Politics Allegations, Indianapolis
Star News (Nov. 21, 1997).
\407\ General Accounting Office, Arlington National Cemetery:
Authority, Process, and Criteria for Burial Waivers, GAO/T-HEHS-98-81
(Jan. 28, 1998).
---------------------------------------------------------------------------
The Allegation That Secretary of Energy Hazel
O'Leary Sold Access to a Meeting. In August 1998, several
Republican leaders called for an independent counsel to
investigate allegations that former Energy Secretary Hazel
O'Leary had, in effect, ``shaken down'' Johnny Chung by
requiring him to make a donation to the charity Africare as a
precondition to a meeting with her. For example, Rep. Gerald
Solomon, the Chairman of the House Rules Committee, criticized
the Attorney General for being ``intransigent'' in refusing to
appoint an independent counsel.408 An investigation
by the Department of Justice, however, found ``no evidence that
Mrs. O'Leary had anything to do with the solicitation of the
charitable donation.'' 409 In fact, it turned out
that Secretary O'Leary's first contact with Mr. Chung occurred
after Mr. Chung had made his contribution, making the
allegation factually impossible.410
---------------------------------------------------------------------------
\408\ GOP Lawmaker Seeks Counsel to Probe O'Leary-Chung Tie,
Buffalo News (Aug. 22, 1997).
\409\ Notification to the Court Pursuant to 28 U.S.C. Sec. 592(b)
of Results of Preliminary Investigation (Dec. 2, 1997).
\410\ Id. This fact was also discovered by the Committee's own
investigation. Shortly after the allegations against Secretary O'Leary
became public, Chairman Burton appeared on national television to
announce his intent to investigate the charges. CBS's Face the Nation
(Aug. 24, 1997). Ultimately, the Committee deposed several individuals,
including Secretary O'Leary, and scheduled a hearing into the matter.
Upon discovering that the allegations were false, the majority canceled
the hearings but never publicly cleared Secretary O'Leary of
wrongdoing.
---------------------------------------------------------------------------
The Allegation That the President and the First
Lady Conspired with the DNC to Steal the President's Christmas
Card List. After an extensive investigation by the Committee
and the Subcommittee on National Economic Growth, Natural
Resources and Regulatory Affairs, Rep. David McIntosh alleged
that he had evidence that the President, the FirstLady, and
other individuals were involved in the ``theft'' of government property
and resources, specifically the President's Christmas card list and
other information from the White House database. According to the
majority report on the matter, the Committee acted to ``expose the
evidence of the President's possible involvement in the theft of
government property and his abuse of power.'' 411 In fact,
as documented in detail in the minority views, not one witness deposed
or interviewed by the Committee supported Rep. McIntosh's
allegations.412
---------------------------------------------------------------------------
\411\ House Committee on Government Reform and Oversight,
Investigation of the Conversion of the $1.7 Million Centralized White
House Computer System, Known as the White House Database, and Related
Matters, H. Rpt. No. 105-828, 105th Cong. 2nd Sess. (1998).
\412\ Id. at 556 (Minority Views).
---------------------------------------------------------------------------
The Allegation That the Justice Department
Retaliated Against Chairman Burton. On September 14, 1997,
Chairman Burton alleged on national television that the Justice
Department was investigating him for possible campaign
fundraising violations in retaliation for his efforts to
investigate President Clinton. Chairman Burton stated that
``it's kind of sad and scary . . . that you're having agencies
of the federal government going after almost anybody who's
looking into allegations against this president and this
administration.'' 413 Although it is true that the
Justice Department is investigating Chairman Burton's
fundraising practices, the Department's investigation was
triggered by allegations by lobbyist Mark Siegel that Chairman
Burton had pressured him for campaign
contributions.414
---------------------------------------------------------------------------
\413\ NBC's Meet the Press (Sept. 14, 1997).
\414\ Pakistan Lobbyist's Memo Alleges Shakedown by House Probe
Leader, Washington Post (Mar. 19, 1997).
---------------------------------------------------------------------------
Many other sensational but unsubstantiated allegations
regarding the Clinton Administration were made by Committee
Republicans in the 104th Congress. These allegations included
the following:
The Allegation That the White House Directed the
IRS and FBI to Investigate Political Enemies. Numerous
Republicans alleged that the White House misused the IRS and
the FBI to investigate and harass the White House travel office
employees. For example, Rep. John Mica charged that the travel
office firings ``involved the abuse of the FBI and the IRS.''
415 Rep. Dan Burton claimed that ``somebody at the
White House was talking to the IRS about an investigation. That
is illegal.'' 416 Rep. Christopher Shays alleged
that ``the White House misused the FBI and the Justice
Department to go after an innocent man.'' 417
---------------------------------------------------------------------------
\415\ House Committee on Government Reform and Oversight, Hearings
on Security of FBI Background Files, 105th Cong., 2nd Sess., 103 (June
19, 1996).
\416\ House Committee on Government Reform and Oversight, Hearings
on White House Travel Office, 105th Cong., 2nd Sess., 110 (Jan. 24,
1996).
\417\ House Committee on Government Reform and Oversight, Hearings
on Security of FBI Background Files, 105th Cong., 2nd Sess., 459 (June
26, 1996).
---------------------------------------------------------------------------
These allegations were not supported by the evidence. The
General Accounting Office determined that ``FBI and IRS
officials' actions during the period . . . were reasonable and
consistent with the agencies'' normal procedures'' and that
there was ``no evidence that White House staff made any contact
with IRS about the Travel Office matter.'' 418 The
Department of Justice Office of Professional Responsibility
found that the FBI acted properly throughout the travel office
investigation.419 The Department of the Treasury
Inspector General also determined that there was no contact
between the White House and the IRS.420
---------------------------------------------------------------------------
\418\ General Accounting Office, Report to Congress on the White
House Travel Office Operations, GAO/GCD-94-132, 5 (May 2, 1994).
\419\ U.S. Department of Justice Office of Professional
Responsibility, Report of OPR's Review of the Conduct of the FBI in
Connection with Its Contacts with the White House in the Travel Office
Matter (Mar. 18, 1994).
\420\ General Accounting Office, Report to Congress on the White
House Travel Office Operations, GAO/GGD-94-132, 64 (May 2, 1994).
---------------------------------------------------------------------------
The Allegation That the White House Illegally
Fired the Travel Office Employees. Republicans also alleged
that the White House fired the employees of the White House
travel office so that White House travel business would be
given to Harry Thomason, a Clinton political supporter. For
example, the Committee report concluded that ``the motive for
the firings was political cronyism: the President sought to
reward his friend, Harry Thomason, with the spoils of the White
House travel business.'' 421 Similarly, Chairman
Clinger alleged, ``When the White House wanted to find a base
for political friends seeking further business with the Federal
Government, they chose the White House Travel Office.''
422
---------------------------------------------------------------------------
\421\ Committee on Government Reform and Oversight, Investigation
of the While House Travel Office Firings and Related Matters, 104th
Cong., 2nd Sess., H. Rpt. 104-849, 2 (1996).
\422\ House Committee on Government Reform and Oversight, Hearings
on White House Travel Office, 105th Cong., 1st Sess., 645 (Oct. 25,
1995).
---------------------------------------------------------------------------
These allegations were not supported by the evidence. The
FBI and the Department of Justice determined that there was
substantial evidence of financial mismanagement in the travel
office, including the deposit of approximately $54,000 in
checks and $14,000 in cash into the travel office director's
personal bank account.423 This finding was supported
by an independent review conducted by KPMG Peat
Marwick.424 The allegations were also reviewed by a
federal grand jury, which found sufficient evidence to indict
the travel office director.425
---------------------------------------------------------------------------
\423\ See Committee on Government Reform and Oversight,
Investigation of the White House Travel Office Firings and Related
Matters, 104th Cong., 2d Sess., H. Rpt. 104-849, 894 (1996) (reprinted
Department of Justice prosecution memorandum).
\424\ Letter from KPMG Peat Marwick to Associate Counsel to the
President William H. Kennedy III (May 17, 1993) (reprinted in Commitee
hearing transcript, 631 (Oct. 25, 1995)).
\425\ Committee on Government Reform and Oversight, Investigation
of the White House Travel Office Firings and Related Matters, 104th
Cong., 2d Sess., H. Rpt. 104-849, 924 (1996) (reprinted indictment).
---------------------------------------------------------------------------
The Allegation That the White House Collected FBI
Files for an ``Enemies List.'' During the Filegate
investigation, many Republicans alleged that the White House
acquired the FBI files of former employees to create a list of
political enemies. The Committee report, for example, found
that ``many of the individuals were political appointees of the
Reagan and Bush administrations. This leads to the possibility
that the Clinton administration was attempting to prepare a
political `hit list' or `enemies list' with the most sensitive
and private information.'' 426 Rep. Dan Burton
charged that one ``could only deduct [sic] that they were going
to be used for political purposes.'' 427 Despite
these allegations and four days of hearings on the FBI file
issue, however, the Committee uncovered no evidence that these
files were ever used for any political purpose.
---------------------------------------------------------------------------
\426\ Committee on Government Reform and Oversight, Investigation
of the White House and Department of Justice on Security of FBI
Background Investigation Files, 104th Cong., 2d Sess., H. Rpt. 104-862,
16 (1996).
\427\ House Committee on Government Reform and Oversight, Hearings
on Security of FBI Background Files, 105th Cong., 2d Sess., 44 (June
19, 1996).
---------------------------------------------------------------------------
The Allegation That Vince Foster Was Murdered. In
a floor speech on November 20, 1995, Chairman Burton revealed
that he and other Republican members had conducted their own
investigation into the death of Deputy White House Counsel
Vincent Foster. According to Chairman Burton, this
investigation raised the possibility that Mr. Foster had been
murdered.428 In fact, however, independent
investigations by the Federal Park Police, Independent Counsel
Robert Fiske, and Independent Counsel Kenneth Starr all
concluded that there was no evidence of any wrongdoing in
connection with Mr. Foster's tragic suicide.429
---------------------------------------------------------------------------
\428\ Congressional Record, H13636 (Nov. 20, 1995).
\429\ Attention Conspiracy Theorists! Hartford Courant (July 18,
1997); Fiske Won't Bring Charges Over High-Level Contacts; Report
Clears Ways for Hill Hearing on Whitewater, Washington Post (July 1,
1994); Starr Report Rules Out Foul Play in Foster Death, Los Angeles
Times (Feb. 23, 1997).
---------------------------------------------------------------------------
Unfortunately, these unsubstantiated allegations have been
given legitimacy by the irresponsible use of the congressional
oversight process. As Rep. Waxman stated at one Committee
hearing, ``Our committee has been the leader in creating a new
species of congressional oversight. The basis for an accusation
is no longer limited to whether something actually happened;
the new standard is that it could have happened. Then the
burden shifts to the accused to disprove it.'' 430
---------------------------------------------------------------------------
\430\ House Committee on Government Reform and Oversight, Hearings
on the Department of the Interior's Denial of the Wisconsin Chippewa's
Casino Applications, 105th Cong. 2d Sess., 10 (Jan. 21, 22, 28, and 29,
1998).
---------------------------------------------------------------------------
III. The Majority Report Contains Little New Information
A. Introduction
After two years and $7.4 million, the Committee on
Government Reform and Oversight has issued a lengthy majority
report that includes virtually no new information.
At the outset of the investigation, Chairman Burton
predicted that this investigation would be ``much bigger than
Watergate was'' 431 and alleged that the Committee's
investigation would disclose a ``massive scheme of funneling
millions of dollars in foreign money into the U.S. electoral
system'' that was orchestrated by the ``Chinese Government at
the highest levels.'' 432 Two years later--after
issuing 1,285 information requests, taking 161 depositions, and
receiving 1.5 million pages of documents--Chairman Burton is
unable to substantiate these allegations. Indeed, the majority
report does not demonstrate that even one official of the White
House knowingly participated in a scheme to solicit illegal
campaign contributions.
---------------------------------------------------------------------------
\431\ PBS's The NewsHour with Jim Lehrer, (Feb. 25, 1997).
\432\ Chairman Burton, Congressional Record, H4097 (June 20, 1997).
---------------------------------------------------------------------------
The majority report's only fresh allegation is its claim
that the DNC and other Democratic organizations have accepted
$1.8 million in additional questionable contributions. Of the
$1.8 million, however, only a small portion seems genuinely
suspect. The genuinely suspect DNC contributions are far less
than the $1.1 million in suspect contributions from foreign
sources that Republicans have yet to return.
The majority blames its lack of success on alleged White
House and DNC stonewalling. But while the White House and DNC
may have been slow in producing some documents, the majority
ultimately received every White House and DNC document and took
every deposition of White House or DNC officials that the
majority sought.
The following discussion is the minority's evaluation of
the majority report. The primary allegations in each chapter in
the majority report are contrasted with the facts in the record
before the Committee.
B. Evaluation of Chapter II of the Majority Report
Majority Allegation: One hundred and twenty witnesses have
invoked their Fifth Amendment rights, fled the country, or
otherwise refused to cooperate with this
Committee.433
---------------------------------------------------------------------------
\433\ The list of these 120 witnesses can be found on the
majority's webpage at http://www.house.gov/reform/oversight/finance/
fled.htm.
---------------------------------------------------------------------------
The Facts: It is true that many witnesses refused to
cooperate with the Committee's investigation, but the
majority's estimate overstates the numbers. For example, the
majority's list includes 14 witnesses who have cooperated fully
with congressional investigations after receiving immunity from
the Congress. Seven of these witnesses on the list--David Wang,
Joseph Landon, Manlin Foung, Kent La, Irene Wu, Larry Wong, and
Nancy Lee--were granted immunity by this
Committee,434 and they have provided sworn testimony
to this Committee.435 Seven other witnesses on the
list--Zie Pan Huang,436 Siuw Moi Lian, Man Ya Shih,
Yi Chu, Man Ho, Huetsan Huang, and Yue Chu--were granted
immunity by and cooperated with the Senate.437 At
least three other witnesses the majority claims failed to
cooperate have, in fact, been interviewed by the Senate
Governmental Affairs Committee or this Committee, including
Johnny Chung,438 Jessica Elnitiarta,439
and Charlie Chiang.
---------------------------------------------------------------------------
\434\ See House Committee on Government Reform and Oversight,
Markup on Granting Congressional Immunity, 105th Cong., 2nd Sess. (May
13, 1998); House Committee on Government Reform and Oversight, Business
Meeting, 105th Cong., 1st Sess. (Sept. 24, 1997).
\435\ Deposition of David Wang, House Committee on Government
Reform and Oversight (Oct. 6, 1997). All depositions referenced in this
section, unless otherwise noted, were taken by the House Committee on
Government Reform and Oversight. Deposition of Joseph Landon (Sept. 29,
1997); Deposition of Manlin Foung (Sept. 29, 1997); Deposition of Nancy
Lee (July 29, 1998); Deposition of Kent La (July 22, 1998); Deposition
of Irene Wu (July 28, 1998); Deposition of Larry Wong (July 27, 1998).
\436\ The majority notes on its website that this witness was given
immunity by the Senate. According to Senate hearing testimony, this
witness's name is actually Xiping Wang. Senate Governmental Affairs
Committee, Hearing on Campaign Fund-raising, 105th Cong., 1st Sess.
(July 29, 1997).
\437\ Huetsan Huang, Siuw Moi Lian, Xiping Wang, and Yue Chu were
given immunity by the Senate Governmental Affairs Committee on June 27,
1997. Donor Probe Veers Toward Bipartisanship, Los Angeles Times (June
28, 1997). Man Ho, Yi Chu, Su Jen Wu, and Man Ya Shih were given
immunity in a Senate committee vote on July 23, 1997. 5 Granted
Immunity in Donor Probe, Los Angeles Times (July 24, 1997). The
deposition testimony of these witnesses is publicly available. See
Deposition of Siuw Moi Lian, Senate Committee on Governmental Affairs
(Aug. 20, 1997) (depositions taken by the Senate Committee on
Governmental Affairs will hereafter be referred to as ``Senate
Deposition''); Senate Deposition of Huetsan Huang (Aug. 20, 1997);
Senate Deposition of ManYa Shih (Aug. 20, 1997); Senate Deposition of
Yi Chu (Aug. 7, 1997); Senate Deposition of Man Ho (Aug. 6, 1997);
Senate Deposition of Yue Chu (July 9, 1997); Senate Deposition of
Xiping Wang (July 9, 1997).
\438\ Committee interview of Johnny Chung (Nov. 14, 1997).
\439\ Senate Report, v. 1, 965, n.8.
---------------------------------------------------------------------------
The majority lists 18 individuals as having ``left the
country.'' This is also misleading. In fact, some of those
people actually live abroad for legitimate reasons and did not
leave the country to avoid the campaign finance inquiry. For
example, Ming Chen, a Beijing restaurateur, appears on the
majority list even though he has resided abroad since before
the campaign finance controversy began.440
---------------------------------------------------------------------------
\440\ Yue Chu, Ming Chen's wife, testified in the Senate that her
husband has been employed in Beijing since October 1995. Senate
Governmental Affairs Committee, Hearing on Campaign Fund-raising, 105th
Cong., 1st Sess. (July 29, 1997).
---------------------------------------------------------------------------
As another example, the majority lists Lei Chu, Laureen
Elnitiarta, Sandra Elnitiarta, Sundari Elnitiarta, Yopie
Elnitiarta, Didi Kurniawan, John H.K. Lee, Felix Ma, Agus
Setiawan, Subandi Tanuwidjaja, Suryanti Tanuwidjaja, Susanto
Tanuwidjaja, and Dewi Tirto as having left the country. While
these individuals apparently reside outside of the United
States, there is noevidence that they have left the country to
flee this Committee's investigation. In fact, according to deposition
testimony, many reside abroad for legitimate business
purposes.441
---------------------------------------------------------------------------
\441\ For example, three of Ted Sioeng's children who appear on the
list live abroad running the family business: Sandra Elnitiarta in Hong
Kong; Laureen Elnitiarta in Jakarta; and Yopie Elnitiarta in China.
Deposition of Robert Prins, 96 (Jan. 27, 1998).
---------------------------------------------------------------------------
The majority implies that the inability to interview or
depose the listed individuals has severely hampered its
investigation. There is little evidence, however, that many of
the 120 witnesses would have any significant information to
contribute. The majority claimed that four of the immunized
witnesses--Irene Wu, Nancy Lee, Larry Wong, and Kent La--had
essential information,442 but when their depositions
were taken, the Committee learned that they had virtually no
significant information.443 Many of the other
witnesses listed by the majority are also likely to be
unimportant. For example, 11 individuals listed by the majority
are Buddhist nuns who were reimbursed for campaign
contributions they made to the DNC. Three of these nuns
444 testified before the Senate. The other eight
445 would have no new information about the conduit
scheme in which they unwittingly participated.446
---------------------------------------------------------------------------
\442\ See, e.g., House Committee on Government Reform and Oversight
Opening Statement by Chairman Burton, Business Meeting (June 23, 1998);
Opening Statement by Chairman Burton, House Committee on Government
Reform and Oversight, Business Meeting (Apr. 23, 1998).
\443\ See Part II.F of this report.
\444\ Man Ho; Man Ya Shih; and Yi Chu.
\445\ Seow Fong Ooi; Hsiu Chu Lin; Jie Chi Rung Wang; Judy Hsu; Jie
Su Hsiao; Hsiu Juan Tseng; Hsin Chen Shih; Yumei Yang.
\446\ According to Michael Madigan, Senator Thompson's chief
counsel during the Senate campaign finance investigation, the three
nuns who testified were the nuns who ``would be the best able to tell
the story as to what happened that day at the Apr. 29, 1996
fundraiser.'' Senate Governmental Affairs Committee, Hearing on
Immunity for Witnesses in Hearings on Campaign Fund-Raising, 105th
Cong., 1st Sess. (July 18, 1997).
---------------------------------------------------------------------------
Majority Allegation: The White House has intentionally
sought to delay this Committee's investigation by refusing to
turn over documents and by asserting frivolous privileges.
The Facts: While it is true that there are instances in
which the White House has been slow to turn over materials
subpoenaed by this Committee, such as the videotapes made by
the White House Communications Agency, there is no evidence
that the White House has intentionally sought to obstruct the
Committee's investigation. To the contrary, the White House has
produced over 70,000 pages of documents to the Committee; 49
present and former White House employees and volunteers have
provided deposition testimony to this Committee; 447
and nine present and past White House employees have testified
publicly at Committee hearings.448 According to a
GAO survey, White House personnel spent a total of 55,106 hours
responding to congressional campaign finance investigations at
a cost of over $2 million dollars.449
---------------------------------------------------------------------------
\447\ Loretta T. Avent; Brian Bailey; Mark Bartholomew; Charles
Benjamin; Jackie Bellanti; Erskine Bowles; Lanny Breuer; Jerry Carlsen;
Kelly Ann Crawford; Jim Dorskind; Charles Duncan; Donald Dunn; John
Emerson; Janice Enright; Karen Hancox; Karl Heissner; Harold Ickes;
Michael Imbroscio; Ben Johnson; Yusuf Khapra; Tracy LaBrecque-Davis;
Phil Lader; Evelyn Lieberman; Bruce Lindsey; Ranelle Lopez; Mack
McLarty; Cheryl D. Mills; Bob Nash; Dimitri Nionakis; Jennifer
O'Connor; Alice Pushkar; Jack Quinn; Gina Ratliffe; Frank Reeder; Evan
Ryan; Michael Schmidt; Marsha Scott; Joseph Simmons; Doug Sosnik; Ann
Stock; David Strauss; Alan Sullivan; Patsy Thomasson; Jodie R.
Torkelson; Laura Tayman; Erich Vaden; Kim Widdess; Margaret Williams;
James B. Wright.
\448\ Lanny Breuer; Kelly Crawford; Brooke Darby; Nancy Hernreich;
Cheryl D. Mills; Dimitri Nionakis; Charles F.C. Ruff; Robert
Suettinger; Margaret Williams.
\449\ General Accounting Office, Survey of Executive Branch Cost to
Respond to Congressional Campaign Finance Inquiries, Enclosure 1
(1998).
---------------------------------------------------------------------------
There are currently no outstanding disputes over document
production issues between the White House and this Committee.
Thus, contrary to the majority's claim of obstruction, the
majority has, in fact, received every document it sought.
Moreover, contrary to the majority report, the White House
never invoked executive privilege over either documents or
testimony.450
---------------------------------------------------------------------------
\450\ The issue of executive privilege did arise during Bruce
Lindsey's deposition when Mr. Lindsey was asked about a conversation he
had had with the President. See Deposition of Bruce Lindsey, 53-55
(Sept. 8, 1997). During the deposition, Mr. Lindsey telephoned White
House Counsel Charles Ruff, who advised Mr. Lindsey not to answer the
question at that time. The White House later determined that it would
not invoke executive privilege in this matter. When the Committee
continued Mr. Lindsey's deposition, he answered all of the Committee's
questions and did not assert executive privilege. See Deposition of
Bruce Lindsey, 3-12 (Apr. 29, 1998).
---------------------------------------------------------------------------
Majority Allegation: The Democratic National Committee's
document production has been slow and disorganized, thus
hampering the Committee's investigation.
The Facts: The DNC produced an extraordinary amount of
information to Congress. In the last two years, the DNC
received subpoenas from six separate congressional committees.
To respond to the requests from campaign finance
investigations, the DNC spent over $6 millionon document
production, as well as an additional $8.8 million on legal
fees.451 The DNC examined more than nine million pages of
documents,452 and produced over 600,000 pages of documents
to the Committee, including some of the DNC's most sensitive documents
such as donor lists. Moreover, 24 current and former DNC employees
provided either deposition or hearing testimony to this
Committee.453
---------------------------------------------------------------------------
\451\ Minority staff phone interview of Paul Palmer (Debevoise &
Plimpton) (Sept. 23, 1998).
\452\ Letter from Judah Best to Chairman Burton (July 23, 1997).
This document and other documents related to this subsection are
attached to this report as Exhibit 7.
\453\ Truman Arnold; Joseph Birkenstock; Ann Braziel; Cheri Carter;
Alejandra Castillo; Bryan Daines; Al Hurst; Carol Khare; Susan Lavine;
Richard Mays; David Mercer; Minyon Moore; Melissa Moss; Kimberly Ray;
Linda Rotunno; Joseph Sandler; Ceandra Scott; Lottie Shackleford; Eric
Sildon; Karen Sternfeld; Brooke Stroud; Richard Sullivan; Ari Swiller;
and B.J. Thornberry.
---------------------------------------------------------------------------
This Committee's document requests to the DNC were
particularly burdensome. The Committee's first subpoena alone
included 69 different requests with more than 290 different
subparts and demanded that the DNC produce in less than three
weeks all documents on these subjects from time periods dating
as far back as 1991.454 The Committee also served
five different sets of interrogatories on the DNC, all with
similarly short and arbitrary deadlines.455 For
example, the Committee's fifth set of interrogatories included
approximately 572 different inquiries and document
requests.456
---------------------------------------------------------------------------
\454\ Subpoena from the House Committee on Government Reform and
Oversight to the Democratic National Committee (Mar. 4, 1997).
\455\ See Interrogatories from the House Committee on Government
Reform and Oversight to the Democratic National Committee (July 15,
1998); Interrogatories to the Democratic National Committee (June 23,
1998); Interrogatories to the Democratic National Committee (Feb. 12,
1998); Interrogatories to the Democratic National Committee (Oct. 6,
1997); Interrogatories to the Democratic National Committee (Sept. 8,
1997).
\456\ Interrogatories from the House Committee on Government Reform
and Oversight to the Democratic National Committee (June 23, 1998).
---------------------------------------------------------------------------
In contrast to the inordinate burden placed on the DNC by
Committee subpoenas, interrogatories, and document requests,
the Republican National Committee received only a single,
narrowly drafted document request from the
Committee.457 This resulted in the production of
only 18,695 pages of documents.
---------------------------------------------------------------------------
\457\ Letter from Chairman Burton to Mike Grebe (RNC general
counsel) (June 6, 1997).
---------------------------------------------------------------------------
C. Evaluation of Chapter III of the Majority Report
The majority report purports to identify $1.8 million in
``illegal'' or ``suspect'' contributions that it asserts should
be disgorged by the DNC and various Democratic state parties.
As detailed below, the majority's primary legal theory has been
undermined by a recent federal court opinion, and the
majority's $1.8 million estimate is substantially inflated.
Even under the majority's legal theory, only a small portion of
the $1.8 million seems genuinely suspect. These possibly
suspect DNC contributions are far less than the $1.1 million in
suspect contributions from foreign sources that the RNC has yet
to return.
Majority Allegation: The DNC consistently fails to return
inappropriate contributions.
The Facts: The DNC has returned contributions when it has
had a good faith basis to believe that the contributions are
illegal or otherwise inappropriate. In fact, the DNC returned
over $3 million in suspect contributions received during the
1996 election cycle. The DNC returned over $1.2 million because
either the DNC determined after its own internal review of the
contributions that it lacked sufficient information to evaluate
the propriety of the contribution or the DNC considered the
contribution to be inappropriate.458 For example,
the DNC refunded $366,000 in soft money contributions from
Johnny Chung and companies associated with Mr. Chung and
$253,000 from Pauline Kanchanalak long before the Justice
Department began to investigate either Mr. Chung or Ms.
Kanchanalak.459
---------------------------------------------------------------------------
\458\ Press Release, DNC Refunds Contributions, Democratic National
Committee (June 27, 1997). This document and other documents related to
this subsection are attached to this report as Exhibit 8. As explained
in Part V of this report, the minority members of the Committee believe
that the campaign finance laws should be reformed in order to render
foreign soft money illegal.
\459\ Id.
---------------------------------------------------------------------------
Majority Allegation: It is illegal for the DNC to accept
soft money contributions from foreign sources.
The Facts: The legal cornerstone of the majority's claim
that the DNC must return $1.8 million in suspect contributions
is the majority's assertion that it is illegal to accept ``soft
money'' contributions from foreign sources. A recent federal
district court decision, United States v. Trie, however, has
called this assertion into doubt.460
---------------------------------------------------------------------------
\460\ United States v. Trie, Crim. No. 98-0029, Slip. Op. (D.D.C.
Oct. 9, 1998).
---------------------------------------------------------------------------
The court in Trie ruled that the restrictions in the
Federal Election Campaign Act (``FECA'') apply only to ``hard
money.'' ``Hard money'' is money that has been donated
exclusively to finance a federal election campaign and is
subject to the provisions of FECA.461 All other
money donated to a political party is known as ``soft money.''
Soft money is deposited by a political party in a
``nonfederal'' account and can be used to pay for state and
local campaigns, as well as party building activities and
generic issue advertising.462 According to the Trie
decision, soft money donations are not subject to FECA's annual
contribution limits or to FECA's other prohibitions, including
its prohibition on foreign contributions and conduit
contributions.463
---------------------------------------------------------------------------
\461\ United States v. Hsia, Crim. No. 98-0057, Slip. Op. (D.D.C.
Sept. 10, 1998).
\462\ Id.
\463\ United States v. Trie, Crim. No. 98-0029, Slip. Op. (D.D.C.
Oct. 9, 1998).
---------------------------------------------------------------------------
The overwhelming majority of the $1.8 million identified in
the majority report as suspect foreign contributions is soft
money, not hard money.464 Thus, if the holding in
the Trie decision is correct, most of the DNC contributions
that the majority asserts should be returned are in fact legal.
---------------------------------------------------------------------------
\464\ Minority staff interview of Joseph Sandler (DNC general
counsel) (Oct. 20, 1998).
---------------------------------------------------------------------------
Majority Allegation: The DNC has retained $1.8 million in
contributions from foreign sources.
The Facts: Even if the majority's legal theory is correct,
its conclusion that the DNC should return $1.8 million is
unfounded. There is simply insufficient factual evidence to
call most of the contributions identified by the majority into
question.
Examples of specific contributions that the majority
contends should be returned are discussed below.
1992 Contributions from James and Aileen Riady. The
majority states that $450,000 in contributions made by James
and Aileen Riady during the 1992 election cycle are ``suspect''
and should be returned. This $450,000 represents 25% of all the
contributions the majority argues should be returned or
disgorged. As the majority report concedes, however, James and
Aileen Riady ``were permanent residents at the time of their
contributions.'' 465 They were therefore legally
entitled to contribute to political campaigns. Section 441e of
FECA, which prohibits contributions from ``foreign nationals,''
specifically excludes persons lawfully admitted as ``permanent
residents'' from the definition of ``foreign national.''
466 Thus, U.S. ``permanent residents'' like the
Riadys could lawfully make campaign contributions to the DNC in
1992.
---------------------------------------------------------------------------
\465\ Committee on Government Reform and Oversight, Investigation
of Political Fundraising and Proprieties and Possible Violations of
Law, 105th Cong., 2d Sess. at Ch. III (1998).
\466\ 2 U.S.C. Sec. 441e(b)(2). FECA's definition of ``permanent
resident'' is the same as ``permanent resident'' is defined under the
provisions of the United States Code governing immigration and
nationality. For immigration and naturalization purposes, a ``permanent
resident'' is defined as: ``the status of having been lawfully accorded
the privilege of residing permanently in the United States as an
immigrant in accordance with the immigration laws, such status not
having changed.'' 8 U.S.C. Sec. 1101(a)(20).
---------------------------------------------------------------------------
The majority argues that instead of following the provision
of FECA that allows permanent residents to contribute, the DNC
should be governed by the definition of a different term,
``foreign principal,'' which is defined in a federal law
governing the registration of ``foreign propagandists.'' This
is an argument that has never been adopted by a court or by the
Federal Election Commission.
1992 Contributions from John and Jane Huang. The majority
asserts that John Huang and his wife Jane contributed $35,800
in ``suspect'' monies to the DNC, the DSCC, and a Democratic
state party in 1992. The majority has no direct evidence
suggesting that the Huangs' 1992 contributions are illegal.
Instead, the majority argues that since Mr. Huang is under
investigation for his role in soliciting potentially improper
contributions in the 1996 elections, the DNC must return
contributions made by Mr. Huang and his wife in prior election
cycles.
This reasoning is not persuasive. Mr. and Mrs. Huang were
American citizens with significant assets at the time their
1992 contributions were made.467 Mr. Huang has not
been convicted of any illegal activities. The fact that Mr.
Huang is under investigation for his role in raising money in
the 1996 campaign does not prove that contributions he and his
wife made four years earlier are illegal.
---------------------------------------------------------------------------
\467\ For Huang, a Changed Lifestyle, Los Angeles Times (Aug. 3,
1997).
---------------------------------------------------------------------------
Contributions from Kent La. The majority's assertion that
the DNC should return a $50,000 contribution from Kent La, who
is president of a Los Angeles-based import company, is simply
unfair. The majority has selectively and unfairly cited only
certain evidence to conclude that Mr. La illegally contributed
to the DNC. This conclusion--and the evidence on which it is
based--are specifically refuted in Mr. La's sworn deposition,
which the majority knows cannot be released under an agreement
with the Department of Justice.
Contributions from the Sioeng Family. The majority report
states that the DNC should return $300,000 in contributions to
the DNC made by relatives of Ted Sioeng and businesses owned by
members of the Sioeng family. As the majority report concedes,
each member of the Sioeng family who contributed to the DNC is
a legal permanent resident who was lawfullypermitted to make
the contribution. The family is wealthy, has substantial business
interests in the United States, and appears to possess sufficient
assets to make each of the contributions.468 Moreover, the
majority is applying a double standard to contributions from the Sioeng
family. The majority asserts that the DNC should return its
contributions from Mr. Sioeng's relatives and Sioeng-related
businesses, but finds nothing improper with the $50,000 contribution
that a Sioeng-related company gave to the National Policy Forum, a
subsidiary of the RNC.469
---------------------------------------------------------------------------
\468\ See discussion at Part III.D.4 of this report.
\469\ Sioeng family contributions to Republicans are discussed
further in Part IV.B.3 and Part IV.B.4.
---------------------------------------------------------------------------
Contributions from Lippo Employees. The majority labels as
``suspect'' $160,000 in contributions made to the DNC in 1992
by various American employees of companies affiliated with the
Lippo Group and those employees' spouses.470 In each
instance, the nub of the majority's analysis is that: (1) each
of the individuals is described as a ``Lippo Executive''; and
(2) the majority cannot identify the ultimate source of the
funds used to make the contributions. Employment by the Lippo
Group, however, does not disqualify an American citizen from
making a political contribution.
---------------------------------------------------------------------------
\470\ The individuals accused by virtue of their association with
the Lippo Group are: Joseph and Donna Chiang; Ricor and Brenda Da
Silveira; David and Christina Yeh; Felix and Mary Ma; and Joseph Sund.
---------------------------------------------------------------------------
Contributions from Pauline Kanchanalak and Duagnet
Kronenberg. The majority states that $374,000 in contributions
to Democrats from Pauline Kanchanalak and Duagnet Kronenberg
should be returned. What the majority neglects to mention,
however, is that most of this money has already been returned
or, in the case of certain state parties, has already been
committed to be returned. The DNC refunded $253,500 to Ms.
Kanchanalak in November 1996, when news of possible campaign
fundraising improprieties appeared. The DNC returned $114,000
to Ms. Kronenberg in July 1998 following her
indictment.471 Of the $290,000 contributed to state
Democratic parties, most has already been returned, while the
remainder is in the process of being returned.472
---------------------------------------------------------------------------
\471\ DNC Returns Third Contribution Linked to Fired Fund-raiser,
Minneapolis-St. Paul Star-Tribune (Nov. 21, 1996); Michael Fletcher and
Thomas Edsall, DNC to Return $100,000, Washington Post (July 21, 1998).
\472\ Minority staff interview of Joseph Sandler (DNC general
counsel) (Oct. 7, 1998).
---------------------------------------------------------------------------
Contributions That Warrant Further Investigation. About 5
percent of the contributions identified in the majority report
do appear to be questionable. While some of these contributions
may be legal under the Trie decision, these contributions
warrant additional scrutiny by the DNC in light of the evidence
presented in the majority report. These contributions include
the contributions of Lei Chu, J & M International (Jack Ho),
Chee Kein Koh, Hsiao Jie Su, Sy Zuan Pan, and the American
Great Ground Group.
Majority Allegation: The Republican party has returned all
suspect foreign contributions it has received.
The Facts: Contrary to the majority's assertion, the
Republican party has not returned all suspect foreign
contributions. In fact, of the $2.8 million in foreign
contributions accepted by Republicans, more than $1.1 million
has not been returned. Suspect foreign funds that Republican
campaign organizations have not returned include:
$782,460 of a $2.1 million contribution from
Hong Kong businessman Ambrous Young to the National
Policy Forum (NPF), a subsidiary of the RNC;
a $25,000 contribution from the Pacific
Cultural Foundation, which is affiliated with the
Taiwanese government, to the NPF;
$95,000 of $205,000 in contributions from
German citizen Thomas Kramer to the Florida Republican
party;
$215,000 of $500,000 in foreign
contributions funneled to the RNC through Michael
Kojima.
In addition to these suspect foreign contributions, the RNC
has not returned a $50,000 contribution by a Sioeng family
company to the NPF. Using the standards the Chairman has
applied to the DNC, this contribution should also be returned.
The evidence that Republicans accepted foreign
contributions is discussed in detail in Part IV.B of this
report.
D. Evaluation of Chapter IV of the Majority Report
1. Allegations Relating to the Riady Family and John Huang
The discussion of the Riady family and John Huang in the
majority report largely rehashes, without adding significant
new evidence, the allegations made against the Riadys and John
Huang two years ago when the Committee's investigation first
began. Despite extensive efforts, the Committee has uncovered
no significant evidence of wrongdoing on the part of the Riady
family or John Huang.
Majority Allegation: The Clinton administration changed
major U.S. policies to benefit the Riadys.
The Facts: Without evidentiary support, the majority
reaches the conclusion that the Riadys may have influenced U.S.
policies, such as ``MFN . . . and access to Vietnam.''
In fact, however, the Clinton administration's decision to
grant most-favored nation (MFN) status to China, which each
year has been supported by congressional majorities, and to
reopen diplomatic relations with Vietnam were based on
important economic, national security, and foreign policy
considerations. It may be true, as the majority notes, that
``the ethnic-Chinese Riady family's business was very closely
tied to the MFN trading privilege for China, and the
development of the Asian markets generally.'' But this does not
mean that the Riadys influenced the Administration's decisions.
There are many American corporations that support MFN and
contribute soft money to both the Republican and Democratic
parties, but that does not mean that the politicians who
support MFN were illegally influenced by the corporation's
donations.
Majority Allegation: There was impropriety in the Lippo
Group's hiring of two officials who left the Administration.
The Facts: The majority provides an extensive discussion of
the Lippo Group's hiring of Mark Middleton and Webster
Hubbell--each of whom was hired under a consulting contract--
but fails to describe how their hiring has any bearing on
campaign fundraising improprieties. The majority report
speculates that improper factors underlay the Lippo Group's
hiring of Mr. Middleton and Mr. Hubbell. The evidence, however,
suggests that the Lippo Group had legitimate business reasons
to hire both individuals, and the majority has failed to
produce any evidence demonstrating that the hires were
improper.
A native Arkansan, Mr. Middleton became acquainted with the
Riadys through family and friends well before the President
Clinton was elected.473 In 1992, Mr. Middleton
worked on the Clinton campaign, and from 1992 to 1995 Mr.
Middleton served as an aide to former White House Chief of
Staff Mack McLarty.474 One of his primary
responsibilities was to serve as Mr. McLarty's liaison to the
business community.475 By the time Mr. Middleton
left the Administration, he had developed contacts throughout
Washington and Asia.476 It is not surprising, and
certainly not illegal, that the Lippo Group would hire a well-
connected individual with whom the Riadys were previously
acquainted.
---------------------------------------------------------------------------
\473\ James Riady was a prominent member of the Arkansas business
community. In the 1980s, the Riadys teamed up with a prominent Arkansas
investment firm Stephens, Inc. to purchase a Little Rock bank, Worthen
Bank International. Mr. Middleton's brother Larry works for Stephens,
Inc. Blind Ambition, National Journal (June 7, 1997); see also
Deposition of Douglas Buford, 64 (Oct 23, 1997) (testimony that Mark
Middleton knew the Riadys).
\474\ Id.
\475\ Id.
\476\ Id. (``Middleton was adept at parlaying his White House
connections into private work . . . Middleton's White House job made
for an easy transition into the private sector'').
---------------------------------------------------------------------------
Similarly, the majority has been unable to produce any
evidence to support Chairman Burton's frequent allegations that
the Lippo Group's hiring of Webster Hubbell was improper or
illegal. From what the Committee has learned, it appears that
the Riadys, like other Hubbell friends and associates, hired
Mr. Hubbell in 1994 to perform legitimate contract work, rather
than for some illegitimate purpose.477
---------------------------------------------------------------------------
\477\ Because key witnesses are unavailable, the Committee has not
been able to determine precisely what work Mr. Hubbell was hired to
perform for the Riadys or subsidiaries of their company, the Lippo
Group. There are indications that Mr. Hubbell may have performed actual
work for the Riadys in 1994; for example, he traveled to Indonesia at
least once.
---------------------------------------------------------------------------
Mr. Hubbell was a lawyer for the Riadys in the 1980s, and
he represented their company very successfully in a multi-
million dollar dispute. In the mid-1980s, James Riady was a
permanent resident of the U.S. living in Little Rock and was
president of a banking company, Worthen Bank International. Mr.
Hubbell was a litigation partner at the Rose Law Firm in the
same city. In 1985, Worthen lost over $50 million in the
collapse of a New Jersey-based government securities firm,
Bevill, Bresler, & Schulman.478 This was a
devastating percentage of Worthen's capital, and it hired the
Rose Law Firm to recollateralize the company and to recover the
lost money through litigation.479 Mr. Hubbell
spearheaded the litigation, and eventually recovered nearly the
full amount lost.480 Given this history, it is not
surprising that, after Mr. Hubbell resigned from the Justice
Department and was looking for work, he would seek out the
Riadys or that they would offer to contract with him for
consulting work.
---------------------------------------------------------------------------
\478\ See, e.g., Arkansas Bank May Have Lost $52 Million: Losses
from Bevill Failure Continue to Escalate, American Banker (Apr. 15,
1985).
\479\ Minority staff interview of C. Joseph Giroir (Apr. 30, 1997).
\480\ See, e.g., Worthen Banking Corp.: Bank Receives $2.1 Million
from Bankruptcy Estate, Wall Street Journal (Dec. 11, 1989) (stating
that Worthen had recovered a total of $32.8 million from the bankrupt
estate of Bevill, Bresler, and Schulman, as well as $20 million from
insurance companies); Minority staff interview of C. Joseph Giroir
(Apr. 30, 1997).
---------------------------------------------------------------------------
The testimony of Douglas Buford, an Arkansas lawyer who has
represented the Lippo Group, sheds additional light on the
hiring of Mr. Hubbell. Mr. Buford has been a friend of Mr.
Hubbell's since the two were undergraduates and then law
students together at the University ofArkansas.481
Mr. Buford testified that Mr. Hubbell called him after leaving the
Department of Justice, told Mr. Buford he was doing consulting work,
and asked Mr. Buford whether the Lippo Group would be able to hire
him.482 Mr. Buford passed Mr. Hubbell's request on to the
Lippo Group by calling John Huang (then a top Lippo employee in Los
Angeles).483 When Mr. Buford called Mr. Huang, he
specifically said that he was communicating on behalf of Mr. Hubbell
and not the White House or anyone else.484
---------------------------------------------------------------------------
\481\ Deposition of Douglas Buford, 55.
\482\ Id. at 51.
\483\ Id.
\484\ Id. at 53-54.
---------------------------------------------------------------------------
Majority Allegation: John Huang engaged in suspicious
political fundraising activities.
The Facts: The majority report describes in great detail
the fundraising activities of John Huang during the 1996
election cycle, including an event-by-event description of Mr.
Huang's attendance at various fundraising events with the
President. Nearly all the information provided in the majority
report, however, has been reported on extensively by the press,
beginning two years ago. The report also details many of the
foreign nationals who attended fundraising events with Mr.
Huang. That information has also been extensively covered by
the press,485 and is also discussed in great detail
in the report of the Senate Governmental Affairs Committee's
campaign finance investigation, which was concluded at the
beginning of this year.
---------------------------------------------------------------------------
\485\ See, e.g., What Clinton Knew: How a Push for New Fundraising
Led to Foreign Access, Bad Money and Questionable Ties, Los Angeles
Times (Dec. 21, 1997).
---------------------------------------------------------------------------
There are some important questions about John Huang that
need to be addressed. However, these questions are not answered
in the majority report, and this Committee's record indicates
it is not the right body to address them.
2. Allegations Relating to Charlie Trie
Between 1994 and 1996, Charlie Trie, his family, and his
businesses contributed a total of $220,000 to the DNC. As a
volunteer fundraiser, Mr. Trie is also credited with raising
approximately $500,000. Following the appearance of press
stories in the fall of 1996, these Trie-related contributions
came under scrutiny by the DNC, the Department of Justice, and
congressional investigators. Independently, as a result of an
internal audit, the DNC decided to return all of Mr. Trie's
contributions and many of the contributions raised by
him.486
---------------------------------------------------------------------------
\486}\Senate Committee on Governmental Affairs, Minority Views,
Investigation of Illegal or Improper Activities in Connection with 1996
Federal Election Campaigns, S. Rpt. No. 167, 105th Cong., 2d Sess., v.
6, 8687 (1998) (hereafter Senate Minority Report).
---------------------------------------------------------------------------
Majority Allegation: Charlie Trie made conduit
contributions to the DNC.
The Facts: There is substantial evidence that Charlie Trie
and Antonio Pan made conduit contributions. These allegations
were first investigated and disclosed by the Senate
Governmental Affairs Committee. In fact, the Senate held a
hearing on this topic on July 29, 1997, during which Yue Chu
and Xiping Wang, two acquaintances of Mr. Trie's, testified
that they had made conduit contributions at the behest of one
of Mr. Trie's employees, Keshi Zhan. Moreover, on January 28,
1998, the Department of Justice indicted Mr. Trie and Mr. Pan
for defrauding the DNC and the Federal Election Commission
through illegal contributions.487
---------------------------------------------------------------------------
\487\ Indictment, United States v. Trie and Pan (D.D.C. Jan. 28,
1998). This document and other documents related to Charlie Trie are
attached to this report as Exhibit 9.
---------------------------------------------------------------------------
The majority report adds little to what is already known
about Mr. Trie's activities. The report contains no evidence
indicating that the DNC engaged in a conspiracy with Trie to
collect conduit campaign contributions. Moreover, the Justice
Department indictment of Mr. Trie indicated that the DNC was a
victim of Mr. Trie's fraudulent schemes, not a participant in
them.488
---------------------------------------------------------------------------
\488\ Id. at 6 (Trie and Pan ``[d]evise[d] and intend[ed] to devise
a scheme and artifice to defraud the DNC and to obtain property from
the DNC by means of false and fraudulent pretenses, representations and
promises''); see also Senate Minority Report, at 5270 (``There is no
evidence before the Committee that any DNC officials were knowingly
involved in Trie's misdeeds'').
---------------------------------------------------------------------------
Majority Allegation: Charlie Trie's political contributions
were funded by the Chinese government.
The Facts: The Committee's investigation uncovered no
information to support Chairman Burton's allegation that
Charlie Trie made conduit contributions on behalf of the
Chinese government.489 The majority's main evidence
that Mr. Trie might have been funneling money from the Chinese
government is the fact that some of the money wired into Mr.
Trie's accounts originated from accounts at the Bank of
China.490 These transfers are not new news and were
investigated extensively by the Senate Governmental Affairs
Committee.491
---------------------------------------------------------------------------
\489\ On June 20, 1997, Chairman Burton alleged that there was a
``massive scheme . . . of funneling millions of dollars in foreign
money into the U.S. electoral system'' that may have been perpetrated
by ``the Chinese Government at the highest levels.'' Chairman Burton,
Congressional Record, H4097 (June 20, 1997). The Chairman had earlier
suggested that Charlie Trie was part of a ``cast of characters'' who
might have put ``America's national security . . . in jeopardy by
foreign money that may have found its way into the Democratic National
Committee's campaign coffers.'' Chairman Burton, Congressional Record,
H1913 (Apr. 29, 1997). The Senate Minority Report found no evidence
that Mr. Trie might have been working for the Chinese government. See
Senate Minority Report, 270 (``The evidence before the Committee does
not establish that the government of the People's Republic of China
provided money to Trie or directed Trie's actions'').
\490\ Rep. Barr stated on a news program that ``communist Chinese
money was funneled into DNC coffers'' through ``Bank of China accounts
in Macao through John Huang and David Wang.'' Transcript from CNN
Crossfire (Dec. 3, 1997).
\491\ Senate Majority Report, 2525-27; Senate Minority Report,
5272-73, 5293-94.
---------------------------------------------------------------------------
By themselves, these foreign bank funds do not demonstrate
that Mr. Trie received money from the Chinese or any other
foreign government; it is equally, if not more, likely that
these funds came from an individual account holder at the Bank
of China. As Rep. Barrett stated at a Committee hearing: ``It
is wonderful to put the innuendo on the table that . . . money
came from the Bank of China, but that doesn't mean that it is
necessarily Chinese government money. But that is what these
hearings are. They are innuendo after innuendo.''492
---------------------------------------------------------------------------
\492\ House Committee on Government Reform and Oversight, Johnny
Chung: His Unusual Access to the White House, His Political Donations
and Related Matters, 105th Cong., 1st Sess. 86 (Nov. 13, 1997).
---------------------------------------------------------------------------
Although the Bank of China is owned by the Chinese
government, the Bank's U.S. counsel explained: ``The fact that
a Chinese company is state-owned does not mean that it is
state-run, and in the Bank's case, it has always strongly
maintained its independent status and avoided political
involvement, both in China and around the world.''
493 The Bank has conducted business with major
American corporations such as Visa International, Inc., Price
Waterhouse, and Morgan Stanley. Moreover, ``[m]ost U.S. firms
with a presence in China routinely open an account with the
Bank of China.'' 494 There is simply no reason to
believe that an account at the Bank of China--even if the
account is at the Beijing branch office--is substantially
different from an account at Citibank or Chase Manhattan.
---------------------------------------------------------------------------
\493\ Letter from Christopher Brady (counsel to Bank of China) to
Christopher Lu (minority counsel) (Oct. 9, 1997).
\494\ Letter from Barry Naughton (professor, Univ. of California,
San Diego) to Rep. Waxman (Oct. 8, 1997).
---------------------------------------------------------------------------
Manlin Foung, Mr. Trie's sister, was asked about the
allegations that Mr. Trie was an agent of the Chinese
government. She called the allegations ``ridiculous.''
495 She also explained that her brother would make a
very unlikely spy: ``Ninety percent of the time he left the
house, he couldn't even find his key. He is not a spy material,
I guarantee you.'' 496
---------------------------------------------------------------------------
\495\ Deposition of Manlin Foung, 122 (Sept. 29, 1997).
\496\ House Committee on Government Reform and Oversight, Hearing
on Conduit Payments to the Democratic National Committee, 105th Cong.,
1st Sess. 125 (Oct. 9, 1997).
---------------------------------------------------------------------------
Majority Allegation: Charlie Trie's political contributions
were funded by the Lippo Group.
The Facts: Sometime in 1995 or early 1996, approximately
two hundred $1,000 travelers checks ($200,000 in total) were
purchased from Bank Central Asia (BCA) in Jakarta,
Indonesia.497 The checks appear to have been
purchased by someone associated with Charlie Trie and were
deposited in numerous persons' accounts during the spring of
1996; some of the checks may have been used for conduit
contributions.498 The majority has suggested that
Charlie Trie and Antonio Pan may have received this money from
the Lippo Group.499
---------------------------------------------------------------------------
\497\ See Letter from Chairman Burton to Dibyo Widodo (Indonesian
chairman of police) (July 29, 1998).
\498\ See Letter from Mark M. Richard (deputy asst. attorney
general) to Chairman Burton (July 30, 1998).
\499\ See Campaign Finance's Parallel Probes, Washington Post (Aug.
6, 1998) (Majority Staff Director Kevin Binger stated that the
travelers checks suggest ``the extent of cooperation between Trie and
people at the Lippo Group''); GOP Probers Report $50,000 in Illegal
Donations to Democrats Via Trie, Washington Times (Aug. 5, 1998)
(Chairman Burton stated that the travelers checks are ``the first time
that this committee has traced funds used for conduit contributions
directly back to Indonesia''); Statement of Chairman Burton, Conduit
Payments to the Democratic National Committee, 7 (Antonio Pan ``is a
rather mysterious figure who had ties to Charlie Trie, the Lippo Group,
and John Huang'').
---------------------------------------------------------------------------
Like the wire transfers from the Bank of China, however,
there is no evidence that these travelers checks came from the
Lippo Group or the Indonesian government. Indeed, there is no
evidence to this point that the checks were even paid for with
foreign funds. Presumably, any individual could walk into a
Bank Central Asia branch--whether or not the individual had an
account at the bank--and purchase travelers checks.
Majority Allegation: Charlie Trie was appointed to the
Bingaman Commission to reward him for his fundraising.
The Facts: In the case of Mr. Trie's appointment to the
Bingaman Commission, the Committee uncovered no evidence of any
illegal or unethical activity. Rather, the depositions of
persons involved in the appointment process established that
Mr. Trie's appointment occurred for the same reasons that
numerous other persons are named to presidential commissions:
Mr. Trie appeared to fit the qualifications that the
Administration was seeking; Mr. Trie was known to persons close
to President Clinton; and Mr. Trie had long supported the
President.
In past administrations, many prominent supporters and
contributors of the President were appointed to advisory
committees. For instance, during the Bush administration,
dozens of ``Team 100'' members--individuals who contributed at
least $100,000 to the Republican National Committee--were
appointed to commerce and trade panels.500 At least
six Team 100 members served on the President's Export Council,
which advised the President on trade matters.501 At
least three others were appointed to the Advisory Committee for
Trade and Policy Negotiations, which advised the United States
Trade Representative.502
---------------------------------------------------------------------------
\500\ Bush's Ruling Class, Common Cause Magazine (April/May/June
1992).
\501\ Id. These Team 100 members included: manufacturer Donald
Bollinger; developer Max Fisher; investor Robert W. Johnson IV;
financier Henry Travis; and corporate lawyer Gerald Parsky.
\502\ These Team 100 members included: Brown-Forman CEO W.L. Lyons
Brown; developer Trammell Crow; and Goodyear Chairman Stan Gault.
---------------------------------------------------------------------------
To support its theory about Charlie Trie, the majority
relies almost exclusively on notes from its interviews of Steve
Clemons, a former aide to Senator Bingaman, who formulated the
idea for the Commission. What the majority report fails to
note, however, is that: (1) Mr. Clemons himself publicly
repudiated the statements attributed to him by the majority;
503 and (2) the statements that Mr. Clemons
supposedly made during the majority's interviews are
contradicted by more than ten witnesses who provided sworn
testimony to this Committee.
---------------------------------------------------------------------------
\503\ After the majority's interview notes of Mr. Clemons were made
public in February 1998, Mr. Clemons stated that ``the notes have
significant inaccuracies and misrepresentations about the important
matters which were discussed.'' Statement of Steven C. Clemons (Feb.
25, 1998). Because the minority was not invited to the interviews of
Mr. Clemons, it cannot confirm the accuracy of the majority's notes.
The majority's decision to make the notes public also violates the
spirit of an agreement reached with the Senate in February. See Letter
from Rep. Waxman to Speaker Gingrich (Feb. 27, 1998). At that time, the
majority had sought to call Mr. Clemons as a hearing witness but was
prevented from doing so by Senator Lott and Senator Daschle. Although
Chairman Burton said he agreed with the Senate's decision, his staff
subsequently released its interview notes of Mr. Clemons.
---------------------------------------------------------------------------
All witnesses deposed by the Committee denied that the
appointment was intended to reward Mr. Trie for his
fundraising. The most important testimony on this matter came
from Charles Duncan, associate director of the White House
Office of Presidential Personnel (OPP), and Phyllis Jones,
former assistant United States Trade Representative for
intergovernmental affairs and public liaison, both of whom were
involved in the selection of commissioners. Mr. Duncan and Ms.
Jones testified that Administration officials wanted to form a
group of qualified commissioners that were diverse in their
viewpoints, ethnicities and party affiliation.504
Both testified that they had thought Mr. Trie was ``qualified''
for the position because he was both an Asian American and a
small businessman who had experience in Asian
trade.505
---------------------------------------------------------------------------
\504\ See, e.g., Deposition of Phyllis Jones, 21-22 (Feb. 11, 1998)
(USTR always tried to form committees with members from diverse
backgrounds, including ethnicity and business size).
\505\ Deposition of Charles Duncan, 90-91 (Aug. 29, 1997) (``I felt
at that time Mr. Trie did have knowledge [of trade barriers with Asian
countries]. . . . This President has been very strong on having an
administration and appointments as diverse as America. Mr. Trie, I
thought, added diversity to it, also. And I thought it was also
important to have small business people on this commission, and Mr.
Trie would have been a small business person''); Deposition of Phyllis
Jones, 60 (``it was because he was a small business person and he was
Asian American and that we needed some more Asian Americans on the
committee, because in order to study about Asia you would think you
would want to have some Asian Americans on there to help with that
perspective'').
---------------------------------------------------------------------------
This Committee also deposed three friends of the President
with whom Mr. Duncan spoke about Mr. Trie's appointment: Bob
Nash (OPP director); Ernest Green (investment banker and
prominent recommender of minority candidates to the
Administration); and Lottie Shackleford (an Arkansas resident
and DNC official). All three of these deponents testified that
there was nothing unusual about Mr. Trie's
appointment.506
---------------------------------------------------------------------------
\506\ See Deposition of Bob Nash, 91-92 (Sept. 4, 1997) (said he
knew Mr. Trie was involved in the restaurant business, in international
trade, and was ``a very competent business person''); Deposition of
Ernest Green, v.1, 127 (Dec. 17, 1997) (recalled recommending Mr. Trie
to Mr. Duncan); Deposition of Lottie Shackleford, 51-53 (Apr. 14, 1998)
(recalled saying something positive about Mr. Trie to Mr. Duncan).
---------------------------------------------------------------------------
Majority Allegation: Democratic contributor and fundraiser
Ernest Green (1) may have made a $50,000 contribution in
February 1996 to assist Wang Jun, the head of a large Chinese
conglomerate, in attending a White House coffee; (2) may have
been reimbursed by Mr. Trie for this contribution; and (3) may
have deposited this money into his bank accounts in a way to
avoid filing currency transaction reports.
The Facts: Speculation is the sole basis for this
allegation. The majority's allegations about Mr. Green are
unsubstantiated and appear calculated to impugn his reputation.
Mr. Green is a prominent figure in the civil rights
community and a distinguished African American leader. As one
of the ``Little Rock Nine,'' Mr. Green helped integrate
Arkansas public schools in the 1950s.\507\ In three days of
sworn deposition testimony before both this Committee and the
Senate, Mr. Green repeatedly denied the many allegations made
in the majority report.508 Although the majority
discounts Mr. Green's testimony, it offers no concrete evidence
to the contrary.
---------------------------------------------------------------------------
\507\ Along with the other members of the ``Little Rock Nine,'' Mr.
Green was awarded a congressional gold medal, pursuant to a bill
approved by the full House on Oct. 9, 1998. The bill had 302 co-
sponsors, including 11 majority members of this Committee.
\508\ See, e.g., Deposition of Ernest Green, v. 1, 296 (no
connection between $50,000 contribution and Wang Jun attendance at
White House coffee); Senate Deposition of Ernest Green, 183 (June 18,
1997).
---------------------------------------------------------------------------
The majority's suggestion that Mr. Trie reimbursed Mr.
Green for his $50,000 contribution to the DNC in February 1996
has no factual foundation.509 The majority claims
that Mr. Green made $38,000 in ``mysterious cash deposits,''
510 on top of $11,500 he acknowledged receiving from
Mr. Trie. Because this $49,500 closely approximates the $50,000
that Mr. Green contributed, the majority report jumps to the
conclusion that the two are related.
---------------------------------------------------------------------------
\509\ In his two depositions before this Committee, Mr. Green
adamantly denied that he was ever reimbursed by anyone for any
political contributions. See Deposition of Ernest Green, v. 2, 15, 18,
20, 23, 26, 30-31, 32, 76 (Sept. 25, 1998), Deposition of Ernest Green,
v. 1, 222.
\510\ In fact, there is nothing mysterious about these cash
deposits. Mr. Green testified that, as a civil rights leader, he was
paid to make many speeches during January 1996 (to commemorate the
birthday of Martin Luther King, Jr.) and February 1996 (to commemorate
Black History Month). Deposition of Ernest Green, vol. 2, 16-17.
---------------------------------------------------------------------------
In fact, the majority report overlooks several important
facts. First, the $38,000 in cash deposits identified by the
majority is based on the majority's arbitrary decision to
analyze only deposits made between December 15, 1995, and
February 28, 1996. When one examines Mr. Green's bank account
statements beyond this two and a half month window, one sees a
consistent pattern of Mr. Green making large cash
deposits.511 The majority conveniently overlooks
these deposits.
---------------------------------------------------------------------------
\511\ For example, in March 1996, Mr. Green made cash deposits of
$2,000, $3,200, and $2,000 into his NationsBank account.
---------------------------------------------------------------------------
Second, Mr. Green is a prominent investment banker with
Lehman Brothers and possesses ample assets to make his own
campaign contributions. In 1995 alone, Mr. Green's bonus was
$350,000.512 The majority also overlooks the fact
that five days before Mr. Green made his $50,000 contribution,
he received $114,961.70 from Lehman Brothers as the first
installment of his 1995 bonus.513
---------------------------------------------------------------------------
\512\ Deposition of Ernest Green, v. 1, 307.
\513\ Deposition of Ernest Green, 195 (June 18, 1997).
---------------------------------------------------------------------------
Finally, Mr. Green had a long history of contributing to
political campaigns. In fact, Mr. Green was a political
appointee in the Carter Administration, a managing trustee of
the DNC, and a close friend of President Clinton.514
Mr. Green also began contributing to the Democratic party and
Democratic candidates well before he ever met Mr. Trie in the
Fall of 1994. According to FEC records, Mr. Green's history of
making political contributions dates back to at least December
1979.
---------------------------------------------------------------------------
\514\ Deposition of Ernest Green, v. 1, 21, 25, 26.
---------------------------------------------------------------------------
There is also no support for the allegation that Mr. Green
structured cash deposits he made into his account in order to
avoid filing currency transaction reports. Mr. Green denied
this allegation during his deposition,515 and the
majority report presents no concrete evidence to the contrary.
---------------------------------------------------------------------------
\515\ Id. at v. 2, 24, 30.
---------------------------------------------------------------------------
3. Allegations Relating to Johnny Chung
Johnny Chung, a Taiwanese-born American citizen,
contributed $366,000 to the Democratic National Committee
during the 1996 election cycle, directly and through his
California-based company Automated Intelligent Systems Inc.
(AISI), a California-based fax broadcasting
company.516 In the mid-1990s, Mr. Chung actively
began to expand his business interests to include ventures with
business people from China and other Asian countries. Also in
the mid-1990s, Mr. Chung began making political contributions,
and he began bringing his actual and prospective business
partners to political events. In March 1998, Mr. Chung pled
guilty to illegally contributing about $28,000 to two
Democratic political campaigns through his employees and their
associates.
---------------------------------------------------------------------------
\516\ See, e.g., Deposition of Nancy Lee, 21-22 (July 29, 1998).
---------------------------------------------------------------------------
Majority Allegation: Johnny Chung made conduit
contributions to the DNC.
The Facts: It is true that Mr. Chung broke the law on two
occasions by using other persons as donors (or ``conduits'')
for his money. Through conduits, Mr. Chung donated about$20,000
to Clinton/Gore '96 and about $8,000 to Senator Kerry's campaign.
However, it appears that the campaign committees that received these
contributions had no knowledge that Mr. Chung was violating the law.
The Committee discovered no significant information about
Mr. Chung's conduit contributions that was not uncovered by the
Department of Justice or by the press. On March 16, 1998, the
Department of Justice filed a criminal information against Mr.
Chung describing Mr. Chung's conduit contributions to Clinton/
Gore and Senator Kerry.\517\ Mr. Chung pled guilty to the
charges. The key facts charged in the criminal information were
as follows.
---------------------------------------------------------------------------
\517\ Criminal information filed against Johnny Chung (C.D. Cal.
Mar. 16, 1998). This exhibit is attached to this report as Exhibit 10.
---------------------------------------------------------------------------
Mr. Chung came to a September 21, 1995,
Clinton/Gore event with approximately twenty guests.
The next day, in order to pay for his guests, Mr. Chung
caused $20,000 of his own money to be contributed to
Clinton/Gore, disguised as $1,000 checks from twenty
separate people.\518\
---------------------------------------------------------------------------
\518\ Id. at Count Three, para. 6-7.
---------------------------------------------------------------------------
Mr. Chung instructed one of his employees,
Irene Wu, to recruit conduit contributors by asking
them to write individual checks for $1,000 from their
own accounts. Mr. Chung then directed that cash be
withdrawn from his own account, and he had Ms. Wu
reimburse each of the conduit contributors with $1,000
in cash.\519\
---------------------------------------------------------------------------
\519\ Id. at Count Three, para. 7-9.
---------------------------------------------------------------------------
Mr. Chung then directed Ms. Wu to deliver the
conduit checks to Clinton/Gore representatives.\520\
---------------------------------------------------------------------------
\520\ Id. at Count Three, para. 10.
---------------------------------------------------------------------------
Mr. Chung also made $8,000 in conduit
contributions to Senator Kerry's campaign through his
company's employees in September 1996.\521\
---------------------------------------------------------------------------
\521\ Id. at Count Three, para. 1-8.
---------------------------------------------------------------------------
Between March and August 1998--after Mr. Chung was charged
by the Justice Department--the Committee deposed four people on
the subject of the conduit contributions that Mr. Chung had
been charged with and admitted. Two of these people--Kimberley
Ray and Karen Sternfeld--were employees of the Clinton/Gore '96
campaign at the time Mr. Chung made his conduit
contributions.\522\ Two others--Irene Wu and Nancy Lee--were
employees of Mr. Chung at this time.\523\ None of these
witnesses added any significant information to the publicly
reported accounts of what Mr. Chung did. The witnesses provided
no evidence that Clinton/Gore '96 or the DNC knew that these
contributions were illegal. They also knew nothing about the
source of Mr. Chung's money.
---------------------------------------------------------------------------
\522\ Deposition of Kimberly Ray (July 30, 1998); Deposition of
Karen Sternfeld (Mar. 10, 1998).
\523\ Deposition of Irene Wu (July 28, 1998); Deposition of Nancy
Lee (July 29, 1998).
---------------------------------------------------------------------------
Majority Allegation: Johnny Chung had ``unusual access'' to
the Clinton administration.
The Facts: Mr. Chung made approximately 50 visits to the
White House. This is a level of access that would surprise and
disturb most Americans. From 1994-1996, Mr. Chung was able to
visit officials at the White House, the Department of Energy,
the Department of Treasury, the Securities and Exchange
Commission, and the Department of Education, as well as an
official at the Federal Reserve Bank in New York.\524\ Mr.
Chung aggressively sought such visits, and in one case was
persistent enough to cause an official to hang up the phone on
him.\525\
---------------------------------------------------------------------------
\524\ Mr. Chung also appears to have arranged additional meetings
at the Department of Commerce and with the U.S. Ambassador to China,
which were not explored in detail in Committee depositions. A private
citizen and Democratic activist helped Mr. Chung arrange these two
meetings. See, e.g., Deposition of Lynn Cutler, 50-65, Exhibit 12 (Dec.
2, 1997).
\525\ Deposition of Corlis Moody, 83 (Dec. 5, 1997).
---------------------------------------------------------------------------
There is, however, no evidence in the record suggesting
that Mr. Chung received any government contracts or grants or
asked for any changes in law or policy. Rather, Mr. Chung's
visits to Administration offices were either photo
opportunities or instances where Mr. Chung and guests received
public information.\526\ As one witness testified, it appeared
that ``he was showing off for the guests that he brought.''
\527\
---------------------------------------------------------------------------
\526\ For example, Mr. Chung's half-hour meeting at the Securities
and Exchange Commission was a routine one at which agency
representatives provided information they routinely provide to the
public in person and over the telephone. Deposition of Brian J. Lane,
18-19, 28-29 (Jan. 20, 1998).
\527\ Deposition of Sandra Rinck, 67 (Sept. 3, 1998).
---------------------------------------------------------------------------
Moreover, the record before the Committee establishes that
Mr. Chung also had occasional access to high-ranking Republican
officials. Photographs were presented to theCommittee that
showed Mr. Chung with Speaker Newt Gingrich, former Senator Bob Dole,
New Jersey Governor Christine Whitman, California Governor Pete Wilson,
Virginia Governor George Allen, and Illinois Governor Jim Edgar.\528\
---------------------------------------------------------------------------
\528\ House Committee on Government Reform and Oversight Hearings
on Johnny Chung: His Unusual Access to the White House, His Political
Donations, and Related Matters, 105th Cong., 1st Sess. 67-73 (Nov. 13,
14, 1997).
---------------------------------------------------------------------------
Majority Allegation: Johnny Chung used foreign money to
make political contributions.
The Facts: As discussed above, Johnny Chung has pled guilty
to making almost $30,000 in illegal conduit contributions.
There is no evidence in the record to this point, however,
linking these contributions to foreign sources.
Mr. Chung, who is an American citizen, also made over
$300,000 in contributions to the DNC. These contributions were
returned by the DNC in early 1997, before the Committee began
to seriously investigate Mr. Chung.\529\ Mr. Chung's bank
records show that on several occasions the funds used to cover
these contributions were wired into his bank account from
foreign banks.\530\ The evidence in the record to this point,
however, does not establish that these were foreign funds. If
Mr. Chung legitimately earned the money that was wired into his
account, he would lawfully be able to contribute it.
---------------------------------------------------------------------------
\529\ DNC press release (June 27, 1997); Senate Majority Report,
783.
\530\ Senate Majority Report, 786.
---------------------------------------------------------------------------
Majority Allegation: Johnny Chung received money from Chao-
Ying Liu, the daughter of a retired Chinese general, that was
intended for political contributions.
The Facts: This allegation comes from press reports stating
that in the course of cooperating with the Department of
Justice prior to sentencing, Mr. Chung told the Justice
Department that Ms. Liu gave him $300,000 for campaign
contributions.\531\ The Committee has obtained no evidence to
this point confirming Mr. Chung's assertions. To the contrary,
when Mr. Chung and his attorney met with Committee members in
November 1997, Mr. Chung provided an account of his activities
that differs significantly from what he reportedly told the
Department. Unfortunately, a confidentiality agreement that Mr.
Chung has refused to waive prevents Committee members from
discussing what Mr. Chung and his attorney told them in
November 1997.\532\
---------------------------------------------------------------------------
\531\ See, e.g., Chung Alleges DNC South Illegal Funds: Justice
Dept. Probe Enters New Phase, Washington Post (June 20, 1998).
\532\ At a May 21, 1998, Committee meeting, Rep. Waxman offered a
motion that the Chairman contact Mr. Chung and his attorney and ask
them to waive the confidentiality agreement. The Committee approved
this motion, but, after Mr. Chung's attorney was contacted, he stated
that Mr. Chung refused to waive the confidentiality agreement.
---------------------------------------------------------------------------
The credibility of Mr. Chung's allegations should also be
viewed in the context of his August 1997 claim that former
Energy Secretary Hazel O'Leary conditioned a meeting with Mr.
Chung on his willingness to make a $25,000 contribution to one
of her favorite charities. As discussed in Part II.H,
subsequent investigations by the Attorney General and this
Committee revealed that Mr. Chung's claim was erroneous.
Majority Allegation: DNC officials knew or should have
known that Mr. Chung's contributions were suspect.
The Facts: Mr. Chung is an American citizen who ran a
legitimate U.S. business. There was no reason for the DNC to be
suspicious of the initial contributions he made in 1994. After
Mr. Chung began to bring Chinese foreign nationals to DNC
events, there were warning signals that the DNC should have
recognized. For example, the DNC could have been more vigilant
in examining the possible connection between Mr. Chung's
$50,000 contribution to the DNC in March 1995 and the foreign
guests with whom he attended a presidential radio address that
month.\533\ There is no evidence in the record, however,
indicating that the DNC affirmatively encouraged Mr. Chung to
violate any federal campaign laws--or even had knowledge that
he was violating these laws.
---------------------------------------------------------------------------
\533\ See Senate Majority Report, 786-79.
---------------------------------------------------------------------------
Majority Allegation: Johnny Chung may have committed
immigration fraud.
The Facts: The majority report alleges that Mr. Chung may
have defrauded the federal government with respect to
immigration matters. The deposition testimony of Mr. Chung's
assistant Irene Wu does provide limited support for this
allegation. Ms. Wu testified that Mr. Chung set up the
companies for three reasons: to make it easier for his Chinese
partners to visit the U.S., to better enable them to eventually
get residency, and to explore business opportunities.\534\
There is, however, no evidence that any of Mr. Chung's partners
actually became U.S. citizens or permanent residents. Moreover,
any sort of fraud on the INS, even if established, would appear
to have no significant relationship to the Committee's campaign
finance investigation. In fact, if Mr. Chung formed companies
with Chinese nationals to help them with visas and eventual
U.S. residence, that may explain why Mr. Chung had contact with
and received money from these Chinese citizens.
---------------------------------------------------------------------------
\534\ Deposition of Irene Wu, 220.
---------------------------------------------------------------------------
4. Allegations Relating to Ted Sioeng
Ted Sioeng (also known as Sioeng San Wong) was a central
figure in the campaign fundraising investigation because of his
close ties to the Chinese government and the substantial
contributions made by his family and businesses to the
Democratic National Committee (DNC), the Republican-affiliated
National Policy Forum (``NPF'') and California Treasurer Matt
Fong, who is also the Republican Senatorial nominee in
California. Mr. Sioeng's relationship with Matt Fong and the
NPF is dealt with in Part IV.B.4.
Majority Allegation: Ted Sioeng worked, and perhaps still
works, on behalf of the Chinese government.
The Facts: According to press accounts, U.S. intelligence
agencies have developed ``credible'' information that Mr.
Sioeng ``acted on behalf of China to influence U.S. elections
with campaign contributions.'' \535\ According to one account:
``The FBI suspects the Chinese may have used Sioeng as a
`cutout'--a front man to make illegal contributions appear
legitimate: the Feds traced the [Matt] Fong money from Chinese
sources into Sioeng-controlled businesses.'' \536\ Federal
investigators have also ``focus[ed] intensively on Sioeng's
cigarette business and whether it might have been used as a
conduit for Chinese government funds to U.S. political
campaigns.'' \537\ These press stories note, however, that
there is ``no information showing Sioeng, his family or
companies received any benefit from political parties or
officials as a result of their donations.'' \538\
---------------------------------------------------------------------------
\535\ Senate Panel is Briefed on China Probe Figure; Officials Say
Evidence May Link L.A. Businessman to Election Plan, Washington Post
(Sept. 12, 1997). Through his attorneys, Mr. Sioeng has adamantly
denied these allegations. See Attorney Statement on Behalf of Jessica
Elnitiarta and Ted Sioeng (May 23, 1997) (``Mr. Sioeng is not, and has
not been, a political agent of the Chinese or any other government'').
\536\ The FBI Zeros in on Exactly How China Secretly Funneled Money
into American Politics, Newsweek (May 19, 1997).
\537\ Senate Panel is Briefed on China Probe Figure, Washington
Post (Sept. 12, 1997).
\538\ Id.
---------------------------------------------------------------------------
While the record before the Committee does not refute these
press reports, the record to this point also does not support
the assertion that such close ties exist between Mr. Sioeng and
the Chinese government. Similarly, the evidence uncovered by
this Committee does not support the majority's assertion that
Ted Sioeng ``worked, and perhaps still works, on behalf of the
Chinese government.'' During the course of its investigation
into Ted Sioeng, the majority deposed 13 witnesses familiar
with Mr. Sioeng's business and political activities. None of
the 12 witnesses whose depositions have been made public
provided testimony that supports the allegations that Mr.
Sioeng is an agent of the Chinese government.\539\
---------------------------------------------------------------------------
\539\ The thirteenth witness is Kent La, a business associate of
Mr. Sioeng. The Department of Justice has objected to releasing his
deposition transcript.
---------------------------------------------------------------------------
Most of the witnesses deposed by the Committee had little
relevant information about Mr. Sioeng or his business or
political activities. To the extent that these witnesses had
first-hand knowledge of Mr. Sioeng's activities, they testified
as follows:
No witness had any knowledge as to whether Mr.
Sioeng or any member of his family was an agent of the Chinese
government or was acting at the direction of the Chinese
government.\540\
---------------------------------------------------------------------------
\540\ See, e.g., Deposition of Cary Ching, 116 (Feb. 11, 1998);
Deposition of Lily Wong, 44 (Feb. 11, 1998) (Wong said she would be
``surprised to learn'' that Mr. Sioeng worked for the Chinese
government because ``[h]e's a businessman and he's independently
wealthy''); Deposition of Daniel Wong, 127-35 (Mar. 12, 1998);
Deposition of Robert Prins, 93 (Jan. 27, 1998) (``Q: Do you have any
reason to believe whatsoever that Mr. Sioeng is an agent of the Chinese
government or any other government? A: No, I would have no reason'');
Deposition of Haddi Kurniawan, 85 (Apr. 14, 1998); Deposition of Boa
Bang Hunyh, 49 (Apr. 15, 1998); Deposition of Gary Locke, 65 (July 7,
1998).
---------------------------------------------------------------------------
No witness had any knowledge about Mr. Sioeng
engaging, either directly or indirectly, in political lobbying
efforts in the U.S. on behalf of the Chinese or any other
government.\541\
---------------------------------------------------------------------------
\541\ See, e.g., Deposition of Daniel Wong, 140 (Mar. 12, 1998);
Deposition of Robert Prins, 96-97 (Jan. 27, 1998) (``I don't think Ted
is that political. . . . I think Ted was looking out for how could he
perhaps buy a future favor from [two Cambodian politicians], not from
us'').
---------------------------------------------------------------------------
No witness had any knowledge about the Chinese
government trying to funnel money into the U.S. through any of
Mr. Sioeng's companies.\542\
---------------------------------------------------------------------------
\542\ See, e.g., Deposition of Glenville Stuart, 119 (Feb. 18,
1998).
---------------------------------------------------------------------------
Several witnesses testified that Mr. Sioeng's
desire to cultivate good relations with local Chinese
government officials was driven by economic, and not political,
reasons.\543\ No witness thought that Mr. Sioeng's connections
to the Chinese government were unusual for a businessman with
substantial business interests in China.
---------------------------------------------------------------------------
\543\ See, e.g., Deposition of Daniel Wong, 126 (Mar. 12, 1998);
Deposition of Robert Prins, 94 (Jan. 27, 1998) (``Q: Do you find Mr.
Sioeng's support of the Beijing government unusual for a businessman
who has substantial business interests in China? A: Not really'').
---------------------------------------------------------------------------
No witness questioned the legitimacy of Mr.
Sioeng's businesses.\544\
---------------------------------------------------------------------------
\544\ See, e.g., Deposition of Robert Prins, 93-94 (Jan. 27, 1998).
---------------------------------------------------------------------------
Although Mr. Sioeng appears to have some relationships with
Chinese government officials, the testimony suggests that these
connections are at the local and provincial level, rather than
at the national level. For instance, Johnny Ma, a sometime-
business associate of Mr. Sioeng's, testified that Mr. Sioeng
was an ``honorary'' advisor to two provinces but that such a
connection was not unusual for a entrepreneur doing business in
China.\545\ As Mr. Ma explained, ``[w]hoever has business
there, almost everyone has some relationship with the
government.''\546\
---------------------------------------------------------------------------
\545\ Deposition of Johnny Ma, 71-72 (Feb. 12, 1998). Mr. Ma also
testified that he thought Mr. Sioeng had a connection with the national
government in Beijing because Mr. Sioeng ``quite often traveled to
Beijing'' and ``[o]therwise why would he travel to Beijing?'' Id. at
87-88. Even assuming that only people with government connections
travel to Beijing--a highly questionable assumption--Mr. Ma later
conceded that he had no first-hand knowledge of Mr. Sioeng's
relationship with the national government. Id., 104 (``Q: Do you have
any firsthand knowledge . . . of his connection to the Beijing
government? . . . A: No, I do not'').
\546\ Deposition of Johnny Ma, 72-73 (Feb. 12, 1998); see also
Letter from N.T. Wang (senior research scholar at Columbia Univ.) to
Rep. Waxman, Nov. 10, 1997 (``[S]ince China is still in a transitional
period, communication with Chinese government officials is a routine
business matter and is totally unrelated to a business person's
ideological or political inclination''). This document and other
documents related to Ted Sioeng are attached to this report as Exhibit
11.
---------------------------------------------------------------------------
Several witnesses contradicted the majority's allegation
that Mr. Sioeng acted as an agent of the Chinese government.
Cary Ching, the president of Grand National Bank, testified:
``[I]t's kind of unthinkable for me personally to think
[Sioeng] would act in the capacity of an agent. . . . I would
be very surprised for people as outspoken as Mr. Sioeng would
serve best in the capacity of a secret agent.''\547\ Glenville
Stuart, a business associate, called these allegations
``ridiculous'' and ``preposterous'' and stated that ``knowing
[Sioeng], he would be a very poor agent.''\548\ Daniel Wong,
the former mayor of Cerritos, CA, was adamant in his belief
that Mr. Sioeng was not a Chinese agent:
---------------------------------------------------------------------------
\547\ Deposition of Gary Ching, 116, 131-32 (Feb. 11, 1998).
\548\ Deposition of Glenville Stuart, 118, (Feb. 18, 1998).
Ted Sioeng doesn't campaign. He's not doing any
political thing. He doesn't even speak English well
enough to influence any senator or congressman. . . .
That means that he was not working for the Chinese
government as an agent, as a spy, like 007, to get the
documents or important stuff. If anything, he was
---------------------------------------------------------------------------
lobbying China for his own good.
Similarly, Johnny Ma testified: ``I don't think that
Chinese Government would hire him as a spy or person like him
because that would seem to be--Chinese Government would be
quite stupid to hire him . . . [b]ecause, from my knowledge, it
seem to me Mr. Sioeng's intention was to try to make money off
from Chinese Government, try to make money from China.''\549\
---------------------------------------------------------------------------
\549\ Deposition of Johnny Ma, 79 (Feb. 12, 1998).
---------------------------------------------------------------------------
There also was no evidence to support the majority's
allegations that Mr. Sioeng organized charitable activities in
the Los Angeles Asian American community at the behest of the
Chinese consulate in Los Angeles. None of the witnesses deposed
was able to provide first-hand testimony on this connection.
However, several witnesses thought that Mr. Sioeng's activities
were not unusual for a businessman trying to cultivate business
contacts in China. According to Daniel Wong, Mr. Sioeng, like
other Chinese entrepreneurs, was motivated to undertake such
charity efforts for economic reasons: ``He was doing that so he
gain his influence in these smaller or poorer state or
provinces so they can get his business deal.''\550\ Johnny Ma
expressed a similar opinion: ``Everybody wants to have some
kind of relationship with the consulate so that they can go
into China and to do business in China.''\551\
---------------------------------------------------------------------------
\550\ Deposition of Daniel Wong, 36 (Mar. 12, 1998).
\551\ Deposition of Johnny Ma, 94 (Feb. 12, 1998).
---------------------------------------------------------------------------
If indeed Mr. Sioeng does work for the Chinese government,
the only high-level U.S. government official with whom he had a
substantive policy discussion was Speaker Gingrich. As the
majority report notes, Mr. Sioeng and the Speaker ``talked
generally about the relationship between the United States and
the PRC'' at a July 1996 meeting.\552\ In contrast, there is no
evidence that Mr. Sioeng had any comparable discussions with
either President Clinton or Vice President Gore at any of the
DNC functions that Mr. Sioeng attended.
---------------------------------------------------------------------------
\552\ Majority Report Chapter IV, Part D.
---------------------------------------------------------------------------
Majority Allegation: Contributions made to the DNC by Ted
Sioeng's family and businesses are illegal because they were
either funded from foreign sources or directed by Mr. Sioeng.
The Facts: In making these allegations, the majority is
clearly applying a double standard. The majority asserts that
the Sioeng-related contributions to the DNC are illegal and
should be returned, but that the Sioeng-related contributions
to the National Policy Forum, a subsidiary of the RNC, are
lawful and need not be returned. In fact, the only Sioeng-
related contribution that clearly came from a foreign source is
the $50,000 contribution that Mr. Sioeng personally gave to
Matt Fong, when Mr. Fong was seeking to retire his campaign
debt from his1994 race to become California state treasurer.
Mr. Sioeng's contributions to Republicans are discussed in detail in
Part IV.B.4 of the minority report.
The Sioeng-related contributions to the DNC were made by:
(1) Mr. Sioeng's daughter Jessica Elnitiarta, who is a legal
resident and allowed to make campaign contributions; and (2)
the family's U.S. companies, Panda Estates and Panda
Industries, which are allowed to make soft money contributions.
These contributions totaled $250,000. There is no evidence in
the record that demonstrates that any of these contributions
were illegal.
The Sioeng family enterprise 553 has sizeable
assets in the U.S., including several companies and a large
hotel in Hollywood.554 These companies and real
estate holdings appear to generate more than enough income in
the U.S. to support the $150,000 in contributions made by Panda
Industries and Panda Estates to the DNC in July 1996. Ms.
Elnitiarta also apparently has substantial personal assets to
support her $100,000 contribution to the DNC in February
1996.555 Indeed, one witness, Daniel Wong, testified
he had no doubt that Ms. Elnitiarta and the companies made the
political contributions with their own funds.556 The
majority speculates that money was transferred from overseas
accounts into the Sioeng family's U.S. accounts for the purpose
of making political contributions. These allegations, however,
appear to be based on pure conjecture.
---------------------------------------------------------------------------
\553\ Robert Prins testified that four of Mr. Sioeng's five
children are involved in the family's business, with each child
handling operations in a different country. Deposition of Robert Prins,
96 (Jan. 27, 1998).
\554\ According to one witness, Daniel Wong, Mr. Sioeng claimed to
have $3 billion in assets in 1992. Deposition of Daniel Wong, 46 (Mar.
12, 1998). Although that claim is probably an exaggeration, it is clear
that Mr. Sioeng and his family have substantial assets.
\555\ In 1994, Jessica Elnitiarta stated in a loan document that
she had a net worth of $8.3 million, with an annual income of $200,000.
Personal Financial Statement of Jessica Elnitiarta (July 26, 1994); see
also Letter from Judah Best to Richard D. Bennett (Mar. 24, 1998)
(``Additional inquiry has shown that both Ms. Elnitiarta and Panda
Estates Investments Inc. have substantial assets in the United
States''). Attorney Statement on Behalf of Jessica Elnitiarta and Ted
Sioeng (May 23, 1997) (``All of [Elnitiarta's] contributions have been
lawful and properly documented''); Deposition of Glenville Stuart, 120
(Feb. 18, 1998) (testified that he thought the Metropolitan Hotel,
which is owned by the Sioeng family, was ``profitable'').
\556\ Deposition of Daniel Wong, 115 (Mar. 12, 1998).
---------------------------------------------------------------------------
There is also no evidence to support the allegation that
political contributions made by Ms. Elnitiarta or the family's
companies were in fact directed by Mr. Sioeng. None of the
depositions provided any evidence to support the allegation
that Mr. Sioeng was directing the political contributions of
either his daughter or the companies. To the contrary,
according to the deponents, Ms. Elnitiarta, while only in her
early thirties, is a competent businesswoman who ably handles
the family businesses, including Panda Estates and Panda
Industries.557 She is responsible for the day-to-day
decisions of the family's American operations and has been
known to overrule her father. One business associate Glenville
Stuart stated: ``Jessica is like the big boss. She runs
everything I'm sure.'' 558 According to Robert
Prins, the president of Iowa Wesleyan College, Ms. Elnitiarta
controls the family's ``California West Coast
responsibilities'' and is involved in all of the family's
business decisions.559 Ms. Elnitiarta's control over
the companies has apparently increased in recent
years.560
---------------------------------------------------------------------------
\557\ Deposition of Matt Fong, v. 1, 63 (Mar. 2, 1998) (Sioeng
``was very proud that his children were independent business owners and
partners of his and they were operating their own enterprises; that
Jessica ran a hotel . . .''); Deposition of Cary Ching, 118 (Feb. 11,
1998) (Jessica operates ``pretty independently'' of father); Deposition
of Lily Wong, 77 (Feb. 11, 1998) (Jessica is in charge of Panda
Estates); Deposition of Daniel Wong, 60 (Mar. 12, 1998) (``Q: It was
your impression that [Jessica] was in charge of Ted Sioeng's business
here in the U.S.? A: Yes, and his son''); Deposition of Johnny Ma, 78
(Feb. 12, 1998) (``Q: Do you know who runs his businesses here in the
United States? A: Probably Jessica, his daughter.''); Deposition of
Haddi Kurniawan, 53 (Apr. 14, 1998) (``Q: Do you know who runs [Panda
Industries]? A: Jessica''); Deposition of Robert Prins, 95-96 (Jan. 27,
1998).
\558\ Deposition of Glenville Stuart, 114 (Feb. 18, 1998).
\559\ Deposition of Robert Prins, 96 (Jan. 27, 1998).
\560\ Deposition of Haddi Kurniawan, 93 (Apr. 14, 1998).
---------------------------------------------------------------------------
Robert Prins also testified that on at least two occasions,
he observed Ms. Elnitiarta overruling her father's decisions to
provide financial assistance to the college.561
Glenville Stuart similarly testified that Ms. Elnitiarta has
``veto power'' over her father's decisions.562 In
sum, based on the depositions conducted by this Committee,
there appears to be no support for the majority's suggestion
that Ms. Elnitiarta made political contributions at her
father's directions.
---------------------------------------------------------------------------
\561\ Deposition of Robert Prins, 95-96 (Jan. 27, 1998).
\562\ Deposition of Glenville Stuart, 115-16 (Feb. 18, 1998).
---------------------------------------------------------------------------
E. Evaluation of Chapter V of the Majority Report
Chapter V of the majority's report alleges that the
Department of Justice and the Federal Election Commission
failed to vigorously pursue campaign finance violations. The
facts, however, show that the Department of Justice's Campaign
Finance Task Force has actively investigated and prosecuted
campaign finance violations. Similarly, given its limited
resources, the FEC has also done its best to enforce federal
election laws.
The Justice Department Task Force, organized in late 1996,
is comprised of over 120 staff including over 20 attorneys and
45 FBI agents.563 At the December 9, 1997, Committee
meeting, Attorney General Reno described the Task Force's
accomplishments to date: ``More than 1 million pages of
documents have been obtained, hundreds of interviews have been
conducted, and agents have been dispatched across the country
and around the world to track down leads.'' 564 As
of October 1, 1998, the Task Force obtained six guilty pleas
565 and had indicted seven others in connection with
its investigation.566
---------------------------------------------------------------------------
\563\ Statistics provided by the Department of Justice Office of
Legislative Affairs.
\564\ House Committee on Government Reform and Oversight, Hearings
on the Current Implementation of the Independent Counsel Act, 105th
Cong., 1st Sess., v. 1 (Dec. 9, 10, 1997).
\565\ Guilty pleas included: Nora and Gene Lum, Trisha Lum, Michael
Brown, Johnny Chung, and Howard Glicken.
\566\ Indictments included: Maria Hsia, Charlie Trie, Antonio Pan,
Pauline Kanchanalak, Georgie Kronenberg, Mark Jimenez, and Yogesh
Gandhi.
---------------------------------------------------------------------------
The FEC has had between 200 and 400 enforcement cases
pending at any given time over the last five years. Its
compliance budget from Congress, however, was only $10.5
million for fiscal year 1998 and its enforcement staff was
limited to 24 staff attorneys, 5 assistant general counsels, 12
paralegals, and 2 investigators.567 This has forced
the FEC to dismiss or take no action on 77% of all the cases it
received over the past three years.568 The recent
efforts of Congress to hamstring the FEC are discussed in more
detail in Part V of this report.
---------------------------------------------------------------------------
\567\ House Committee on Government Reform and Oversight, Hearing
on Federal Election Commission Enforcement Actions: Foreign Campaign
Contributions and Other FECA Violations, 105th Cong., 2d Sess., 65, 66
(Mar. 31, 1998).
\568\ Statistics provided by the Federal Election Commission.
---------------------------------------------------------------------------
The majority's allegations of malfeasance at the Department
of Justice and the FEC do not concern the 1996 election
campaign. Rather, they arise from activities in the 1994 and
1992 election campaigns. This retreat in time caused Rep.
Waxman to observe, ``it seemed to me, that what we were
supposed to be investigating are abuses from the 1996 election.
. . . At this rate, Mr. Chairman, it will probably be some time
in June, I expect, that we'll be focusing on the 1960 election,
and I suppose the topic will be whether President Kennedy stole
that election.'' 569
---------------------------------------------------------------------------
\569\ House Committee on Government Reform and Oversight, Hearing
on Venezuelan Money and the Presidential Election, 105th Cong., 2d
Sess., 8 (Apr. 30, 1998).
---------------------------------------------------------------------------
1. Allegations Relating to Jorge Castro Barredo and Charles Intriago
Majority Allegation: Jorge Castro made foreign conduit
contributions to the DNC in the 1992 campaign.
The Facts: On April 30, 1998, the Committee held a hearing
entitled, ``Venezuelan Money and the Presidential Election.''
At the hearing, the Committee heard evidence that in 1992, two
U.S. citizens acted as conduits for $50,000 in campaign
contributions from a Venezuelan company. The Committee's first
witness, Jorge Castro, testified that he and his aunt, Maria
Sire Castro, each contributed $20,000 to the Democratic
National Committee and $5,000 to two separate state Democratic
parties in 1992. Mr. Castro and Ms. Sire Castro are both U.S.
citizens. Mr. Castro further testified that he and Ms. Sire
Castro were reimbursed for the contributions by a Venezuelan
company owned by Mr. Castro's grandfather, Orlando Castro
Llanes.
The next witnesses, Assistant Manhattan District Attorneys
Richard Preiss and Joseph Dawson, testified that, while
investigating the Castro family for bank fraud, they uncovered
bank records and canceled checks that showed that Mr. Castro
and Ms. Sire Castro received wire transfers in amounts equal to
the contributions from a Venezuelan company owned by Mr. Castro
Llanes in the days following the contributions. Mr. Castro
Llanes, through his attorney, disputes that he made conduit
contributions.570
---------------------------------------------------------------------------
\570\ Minority staff phone interview of Richard Sharpstein (Feb.
1998).
---------------------------------------------------------------------------
Although the evidence is not conclusive, it supports Mr.
Preiss and Mr. Dawson's conclusion that Mr. Castro and Ms. Sire
Castro were reimbursed for their contributions through Mr.
Castro Llanes's Venezuelan company. Thus, it appears that
conduit contributions were made during the 1992 Presidential
campaign.
Majority Allegation: Charles Intriago, the attorney who
solicited the contributions from Mr. Castro, knew that the
contributors would be reimbursed from foreign funds.
The Facts: Charles Intriago, a Miami attorney, former
congressional staffer, and assistant U.S. attorney, has
acknowledged that he solicited the contributions from Mr.
Castro, but maintains that he did not know that the
contributions were going to be reimbursed from foreign funds.
According to his attorney, ``Charles Intriago . . . solicited
contributions from a number of well-off American citizens with
whom he was acquainted, and who he believed had the personal
financial capability to make such contributions.''
571
---------------------------------------------------------------------------
\571\ Statement of Robert Plotkin (counsel for Charles A. Intriago)
(Reprinted in Hearing on Venezuelan Money and the Presidential
Election, 35-37).
---------------------------------------------------------------------------
There is evidence in the record that supports Mr.
Intriago's position. At the hearing, Mr.Castro acknowledged
that the conduit scheme was designed to make the contributions appear
legal. According to the hearing testimony:
Mr. Waxman. Well, it would appear to the Democratic
party, to President Clinton, the Clinton-Gore campaign,
or anybody who got your money that you are a U.S.
citizen writing a check to the Democratic party.
Mr. Castro. That is correct.
Mr. Waxman. On the surface, to them, it would appear
to be legal.
Mr. Castro. That is correct.\572\
---------------------------------------------------------------------------
\572\ House Committee on Government Reform and Oversight Hearing on
Venezuelan Money and the Presidential Election, 105th Cong. 2d Sess.,
41, Apr. 30, 1998.
Furthermore, by his own admission, Mr. Castro had the
financial resources to make the contributions. In other words,
no one would have any reason to suspect that the contributions
came from a foreign source.\573\
---------------------------------------------------------------------------
\573\ Majority counsel Richard Bennett asked Mr. Castro: ``In terms
of your own personal financial situation in 1992, were you in a
financial position to make contributions totaling $25,000 in September
1992?'' Mr. Castro replied, ``I was.'' Id. at 12.
---------------------------------------------------------------------------
The majority's ``evidence'' that Mr. Intriago knew that the
contributions were illegal was limited to the testimony of Mr.
Castro and a fax from Mr. Intriago found by Mr. Dawson in Mr.
Castro's office ``instructing Castro Barredo to make conduit
contributions.'' \574\ This characterization of the fax,
however, is factually inaccurate. The fax only specified the
names of campaign committees and amounts of money to be
contributed to each; it did not refer in any way to Mr. Castro
being reimbursed through his grandfather's company. In fact,
Mr. Castro testified that he asked Mr. Intriago to send the fax
with the exact instructions on where Mr. Castro should direct
his contributions.
---------------------------------------------------------------------------
\574\ Majority Report, Chapter V, Part A, Section III.
---------------------------------------------------------------------------
The most persuasive evidence implicating Mr. Intriago is
Mr. Castro's testimony. Mr. Castro, however, is not necessarily
a credible witness. In February 1997, Mr. Castro, his
grandfather, and his uncle were convicted of bank fraud and
larceny which cheated depositors out of approximately $55
million. Mr. Castro had used the bank's assets to purchase
sports cars, an airplane, a yacht, and other luxuries. At the
trial, Assistant District Attorney Preiss described Mr. Castro
as someone ``who thought [he] could fool other people.'' \575\
Moreover, Mr. Castro's motives could be suspect because he did
not ``volunteer'' information about the conduit contributions
until after his conviction. Mr. Castro brought up the
contributions at a debriefing with prosecutors at which he
attempted to show that he wanted to cooperate with prosecutors.
In return, at his sentencing on December 15, 1997, Assistant
District Attorney Dawson told that court that Mr. Castro had
provided the prosecutors with useful information. This led the
judge to give Mr. Castro a reduced sentence of only 3\1/2\
years in prison instead of the possible maximum sentence of 40
years. Mr. Castro also testified that he was appearing at the
Committee's hearing because the majority promised to write a
letter on Mr. Castro's behalf to the New York State Department
of Correctional Services in an effort to get Mr. Castro into a
work release program. Mr. Castro testified at the hearing as
follows:
---------------------------------------------------------------------------
\575\ Trial Transcript, New York v. Jorge Barredo Castro, Ind.
#2459-96, 14 (NY Sup. CT. Nov. 21, 1996).
Mr. Barrett. The reason you are here today is you
want to get out of jail, isn't it?
Mr. Castro. The reason I'm here today is?
Mr. Barrett. You want to get out of jail.
Mr. Castro. Correct.
Mr. Barrett. There's really no other reason other
than that.
Mr. Castro. Go down deep, that's the reason.\576\
---------------------------------------------------------------------------
\576\ House Committee on Government Reform and Oversight Hearing on
Venezuelan Money and the Presidential Election, 105th Cong. 2d Sess.,
52 (Apr. 30, 1998). See also Letter from Chairman Burton to
Commissioner Glenn S. Goord (New York State Department of Correctional
Services) (May 1, 1998).
Majority Allegation: The Castro family received ``red
carpet treatment'' from the Clinton Administration.
The Facts: According to the majority report, Orlando Castro
Llanes ``received red carpet treatment from the Clinton
Administration over the coming year,'' including attending
President Clinton's inauguration in 1993, a White House
reception for DNC donors, and a meeting with the State
Department regarding Mr. Castro Llanes' business
interests.\577\
---------------------------------------------------------------------------
\577\ Majority Report, Ch. V, Part A, Section II (A). The report
also alleges that Mr. Castro Llanes was ``seeking to have Intriago
appointed U.S. ambassador to Venezuela,'' Majority Report, Ch. V, Part
A, Section I(A). There was no evidence presented to show that Mr.
Intriago either sought, or was considered for, this position.
---------------------------------------------------------------------------
The evidence, however, does not support the accusation that
Mr. Castro Llanes received any special treatment from the
Clinton administration as a result of his grandson's campaign
contributions. In fact, Mr. Castro testified that the Castro
family did not receive any special treatment at the
inauguration. When asked by majority counsel if he and his
family attended one of the inaugural balls, Mr. Castro replied,
``Not the inaugural ball. It was the big--the small gathering
in front of the Capitol Hill with about 3 million other
people.'' \578\
---------------------------------------------------------------------------
\578\ House Committee on Government Reform and Oversight Hearing on
Venezuelan Money and the Presidential Election, 105th Cong. 2d Sess.,
29 (Apr. 30, 1998).
---------------------------------------------------------------------------
Similarly, it appears that Mr. Castro Llanes's visit to the
White House was limited to a large reception attended by
hundreds of people.\579\ The State Department meeting also
appears to be nothing more than a courtesy meeting arranged
through Mr. Intriago's connections.\580\ There is no evidence
that the meeting was related to the Castro contributions or
that the State Department took any action in response to that
meeting.
---------------------------------------------------------------------------
\579\ Id.
\580\ Id. at 31.
---------------------------------------------------------------------------
Majority Allegation: The Justice Department ignored the
evidence of the illegal conduit contribution scheme involving
Mr. Castro.
The Facts: The facts show that the Justice Department did
investigate the evidence gathered by the Manhattan District
Attorney and, at the time of the Committee hearing, the Justice
Department's investigation had not been closed.
In May 1997, an assistant U.S. attorney and agents from the
FBI and the IRS met with Mr. Preiss and Mr. Dawson from the
Manhattan District Attorney's office in New York. That summer,
the case was transferred to the Justice Department Task Force
and assigned to another attorney, who also met with Mr. Preiss
and Mr. Dawson about the case. More recently, the Justice
Department sent FBI agents to interview Mr. Intriago and his
former assistant, Wendy Brown, and interviewed members of the
Castro family.\581\
---------------------------------------------------------------------------
\581\ Minority staff phone interview of Robert Plotkin (April
1998).
---------------------------------------------------------------------------
The majority's allegations are based on a letter from the
Justice Department to the Manhattan District Attorney which
said that the Justice Department ``had concluded that there is
at this time no further role for [Mr. Castro] to play in
matters under investigation by the Task Force.'' \582\ The
letter was a response to a call from Mr. Preiss to the Justice
Department asking if the Justice Department wanted the
Manhattan District Attorney to request the trial judge to delay
Mr. Castro's sentencing and was not indicative of the Justice
Department's interest in pursuing the case. In fact, according
to the Justice Department, the case is still under
investigation. It is not unusual for the Justice Department to
take considerable time to build a strong case or to decide that
the evidence against certain individuals is insufficient. For
example, there was evidence that Charlie Trie had made illegal
contributions during the 1996 campaign as early as October
1996, yet Mr. Trie was not indicted until January 28, 1998--15
months after the allegations surfaced.
---------------------------------------------------------------------------
\582\ Letter from Lee Radek (Justice Department public integrity
section chief) to Robert Morgenthau (Manhattan district attorney) (Oct.
17, 1997).
---------------------------------------------------------------------------
Regrettably, Chairman Burton never gave the Justice
Department an opportunity to respond to his accusations and
clarify the record. When asked at the hearing why the Justice
Department was not invited to testify, Chairman Burton assured
the Committee that the Justice Department would be invited to a
subsequent hearing.\583\ The Justice Department, however, was
never given an opportunity to respond to these accusations.
---------------------------------------------------------------------------
\583\ House Committee on Government Reform and Oversight Hearing on
Venezuelan Money and the Presidential Election, 105th Cong. 2d Sess.,
69 (Apr. 30, 1998).
---------------------------------------------------------------------------
Majority Allegation: The contributions were made from
``drug money'' and Jorge Castro was in danger of physical harm
for his testimony.
The Facts: Chairman Burton made additional unsubstantiated
allegations the night before the April 30, 1998, hearing on
CNN's Larry King Live. On that program, Chairman Burton stated,
``Tomorrow we're going to have a hearing. We're bringing in a
fellow who laundered $50,000 from Venezuela. We think part of
it might have been drug money. Mr. Morgenthau, the district
attorney in New York--a Democrat--referred some of this
information to us. We finally got this fellow in a safe prison
so he wouldn't be stabbed or hurt when he testified.'' \584\
---------------------------------------------------------------------------
\584\ Chairman Burton, CNN's Larry King Live (Apr. 29, 1998).
---------------------------------------------------------------------------
These accusations were discredited at the hearing. When
asked about the accusation that the contributions may have come
from drug money, Mr. Preiss, the assistant Manhattan district
attorney, testified that ``there was nothing at all that was
related to that.'' \585\ Similarly, Mr. Preiss testified that
Mr. Castro never expressed any concerns about his safety other
than general concerns about being a cooperating witness while
in prison.\586\ In fact, when Mr. Castro was asked if someone
had attempted to stab him while in prison, he replied, ``That's
incorrect.'' \587\
---------------------------------------------------------------------------
\585\ House Committee on Government Reform and Oversight Hearing on
Venezuelan Money and the Presidential Election, 105th Cong. 2d Sess.,
93 (Apr. 30, 1998).
\586\ Id.
\587\ Id. at 74.
---------------------------------------------------------------------------
2. Allegations Relating to Thomas Kramer and Howard Glicken
Howard Glicken is a Democratic fundraiser from Florida. Mr.
Glicken was investigated by the FEC for his role in soliciting
illegal foreign campaign contributions from German national
Thomas Kramer. Ultimately, the FEC decided not to pursue any
action against Mr. Glicken, primarily because of a lack of
resources and the fact that the statute of limitations was
about to expire on his violations. The Department of Justice
campaign finance task force obtained a guilty plea from Mr.
Glicken in July 1998.
Majority Allegation: The FEC decided not to proceed against
Mr. Glicken because of his ties to the Vice President.
The Facts: The overwhelming weight of the evidence produced
at a Committee hearing on March 31, 1998, indicated that the
FEC's decision not to proceed against Mr. Glicken was not the
result of improper political influence.\588\ In fact, FEC
General Counsel Larry Noble testified that the decision not to
proceed against Mr. Glicken was approved by a unanimous vote of
the Commission's Republican and Democratic commissioners.\589\
---------------------------------------------------------------------------
\588\ House Committee on Government Reform and Oversight, Hearing
on Federal Election Commission Enforcement Actions: Foreign Campaign
Contributions and Other FECA Violations, 105th Cong., 2d Sess. (Mar.
31, 1998).
\589\ Id. at 81.
---------------------------------------------------------------------------
In this case, the FEC had already obtained major fines
against the contributors (Mr. Kramer and his secretary, Terri
Bradley), the only recipient of the illegal contributions that
refused to return the improper funds (the Republican party of
Florida), and the law firm that represented Mr. Kramer in
immigration matters (Greenberg, Traurig, et al.). Mr. Noble
testified that, faced with a large caseload and few resources
to handle that caseload, he decided to recommend that the FEC
not pursue any of the solicitors of Mr. Kramer's contributions
to both Democrats and Republicans:
If you look at the file on this case, we did not search
out any of the other solicitors. There were a lot of
contributions made here. We can assume that there were
a lot of solicitors, both on the Democratic and the
Republican side, who solicited contributions from Mr.
Kramer. We don't have the resources to go after every
one of those. We had to make a decision early on in the
case of what we were going to do, and you have to take
it at the time of that case of what we were dealing
with. In terms of just resources, we were averaging 319
cases in any given month from that year . . . of which
we activated only about a third.\590\
---------------------------------------------------------------------------
\590\ Id. at 40.
According to Mr. Noble, part of the reason resources were
not available to pursue Mr. Glicken was the Commission's
determination to address allegations of wrongdoing in the 1996
---------------------------------------------------------------------------
election cycle:
When we discuss how to proceed on these cases, we're
aware that we can only handle a very limited amount--a
very limited number of investigations, and, frankly, at
the time this came up last summer, we knew that we are
already dealing with large cases coming in from the
1996 election. Remember, these contributions are from
1993, 1994. We are trying to get out of the 1993, 1994
cycle and we have to look at where the resources are
going to go.\591\
---------------------------------------------------------------------------
\591\ Id. at 63-64.
Mr. Noble also explained why the Commission would be unable
to complete its investigation into Mr. Glicken before the
---------------------------------------------------------------------------
expiration of the statute of limitations:
If you look at the procedures in the statute that we
have to follow, we have figured out that not counting
any work the FEC does, we have to take approximately
120 to 130 days to get a case through. That's not
counting any investigation, any writing of reports. We
know, as a practical matter, based on our experience,
that it would take us a long time to get that case [the
Glicken case] through, unless it was going to settle
early.\592\
---------------------------------------------------------------------------
\592\ Id. at 80.
Finally, Mr. Noble explained why reference had been made to
---------------------------------------------------------------------------
Mr. Glicken's relationship with the Vice President:
Mr. Waxman. Your statement said that this man was,
``a prominent Democratic fundraiser including his
potential fundraising involvement in support of Vice
President Gore's expected Presidential campaign, it is
unclear that this individual would agree to settle this
matter short of litigation.'' Now that's all one
sentence, but do you think he's not going to settle the
litigation because he's a friend of Gore's?
Mr. Noble. Our experience has been that the more
prominent somebody is, the higher the profile that he
is, that they are going to fight you more.\593\
---------------------------------------------------------------------------
\593\ Id. at 101-102.
No evidence was produced at the hearing calling into
question Mr. Noble's assurances that no improper factors had
been taken into account in the decision not to proceed against
Mr. Glicken.
Majority Allegation: The FEC was negligent in failing to
refer the Glicken matter to the Department of Justice.
The Facts: Federal law prohibits the FEC from referring any
matter to the Department of Justice without first conducting
its own investigation. 2 U.S.C. Sec. 437g (a)(5)(c) prohibits a
referral to the Justice Department absent a ``finding of
probable case'' by the Commission. A ``finding of probable
cause'' by the Commission can only occur after a lengthy
administrative procedure, including an investigation, mandated
by the FEC's authorizing statute.\594\ As explained by the
witnesses at the Committee's hearing into the matter, such an
investigation could not have been completed before the statute
of limitations had run.
---------------------------------------------------------------------------
\594\ 2 U.S.C. Sec. 437g.
---------------------------------------------------------------------------
During the Committee's hearing on March 31, 1998, Mr. Noble
and Lois Lerner, associate general counsel at the FEC,
testified as follows:
Mr. Burton. If it's a criminal activity involving
campaign contributions of this type, it should have
been referred to the Justice Department for action, and
you didn't do it.
Ms. Lerner. We can't do it under the statute. We can
only do what the statute allows us to.
Mr. Noble. Mr. Chairman, we would've violated our law
had we referred Mr. Glicken over without finding
probable cause to believe.
Mr. Burton. But the probable cause, you know----
Mr. Noble. It's a formal finding by the Commission.
This is not just something we decide is probable cause.
We have to put a case before the Commission and we have
to put the evidence before the Commission and say
there's probable cause. And they have to vote by four
votes that there's probable cause.\595\
---------------------------------------------------------------------------
\595\ House Committee on Government Reform and Oversight Hearing on
Federal Election Commission Enforcement Actions, 105th Cong., 2d Sess.,
100 (Mar. 31, 1998).
---------------------------------------------------------------------------
F. EVALUATION OF CHAPTER VI OF THE MAJORITY REPORT
The minority's discussion of the controversy surrounding
the Department of Interior's denial of the Hudson casino
application is discussed in Part II.C of the minority report.
IV. A Review of Questionable Republican Campaign Finance Practices
The majority report describes in detail allegations
relating to conduit contributions to the Democratic Party,
foreign contributions to the Democratic Party, Democratic
contribution-for-access incidents, and other purported
Democratic campaign finance improprieties. There is no question
that the major political parties have exploited a campaign
finance system riddled with loopholes. And there is no question
that Democrats have received illegal campaign contributions.
Unfortunately, the majority report addresses only one side
of the story. It fails to discuss the many serious allegations
of questionable campaign finance practices by Republicans. This
section of the minority report discusses several examples of
Republican abuses: conduit contributions; foreign
contributions; enhanced access derived from contributions;
policy benefits that may be a result of campaign contributions;
and other questionable campaign practices.
A. CONDUIT CONTRIBUTION SCHEMES AND REPUBLICAN CAMPAIGNS
Although the Committee's investigation focused on conduit
contributions to Democratic candidates and campaigns, one of
the most serious allegations involving illegal conduit
contributions in the 1996 campaign actually involves
Republicans. In the case of the conduit contribution schemes
involving Charlie Trie and Johnny Chung, there is little
evidence that the candidates and parties receiving the
contributions were aware of the conduit scheme. There is,
however, specific and credible evidence that a senior
Republican member of Congress, Majority Whip Tom DeLay, and a
Republican congressional candidate, Brian Babin, knowingly
participated in a scheme to funnel illegal conduit
contributions to Mr. Babin's campaign.
The allegations involving Mr. DeLay and Mr. Babin, as well
as evidence of four other conduit contribution schemes
involving Republicans, are discussed below.
1. The Prohibition on Conduit Contributions
The Federal Election Campaign Act (FECA) limits the amount
that an individual can give to a candidate in any federal
election to $1,000.\596\ To prohibit wealthy individuals from
circumventing this limitation, FECA prohibits persons from
contributing money through others:
---------------------------------------------------------------------------
\596\ 2 U.S.C. Sec. 441a.
No person shall make a contribution in the name of
another person or knowingly permit his name to be used
to effect such a contribution, and no person shall
knowingly accept a contribution made by one person in
the name of another person.\597\
---------------------------------------------------------------------------
\597\ 2 U.S.C. Sec. 441f.
---------------------------------------------------------------------------
FECA also states in pertinent part:
For purposes of the limitations imposed by this
section, all contributions made by a person, either
directly or indirectly, on behalf of a particular
candidate, including contributions which are in any way
earmarked or otherwise directed through an intermediary
or conduit to such candidate, shall be treated as
contributions from such person to such candidate. The
intermediary or conduit shall report the original
source and the intended recipient of such contribution
to the Commission and to the intended recipient.\598\
---------------------------------------------------------------------------
\598\ 2 U.S.C. Sec. 441a (a)(8).
Both Republicans and Democrats have violated the conduit
contribution provisions of FECA. As Rep. Waxman noted,
``Conduit payments are, of course, illegal; unfortunately,
they've also become much too common.'' 599 In the
fall of 1997, the Federal Election Commission was investigating
27 conduit payments involving 214 individuals. The FEC had also
assessed fines in 21 other conduit contribution cases involving
the 1992, 1994, and 1996 election campaigns. The total fines
assessed by the FEC against the 108 participants in the 21
completed cases was $335,000.600
---------------------------------------------------------------------------
\599\ House Committee on Government Reform and Oversight, Hearing
on Conduit Payments to the Democratic National Committee, 105th Cong.,
1st Sess., 12 (Oct. 9, 1997).
\600\ Id.
---------------------------------------------------------------------------
2. Conduit Contribution Scheme Involving Majority Whip DeLay, Peter
Cloeren, and Brian Babin
In the typical conduit contribution scheme, the organizers
of the scheme and the participants know that it is occurring,
but the candidate may be unaware that the contributions the
campaign is receiving may be illegal. The Committee learned of
only one instance where there is specific and credible evidence
that the candidate knew that he was receiving illegal conduit
contributions. This episode concerns Brian Babin, the
Republican congressional candidate in the Second District of
Texas in 1996, and Peter Cloeren, the organizer of the scheme
who acknowledged his responsibility and was fined $200,000. Mr.
Babin is also alleged to have enlisted Majority Whip Tom
DeLay's help to facilitate Mr. Cloeren's illegal conduit scheme
and to encourage the scheme's participants to continue to
violate federal election laws.
The allegations concerning Rep. DeLay, Mr. Babin, and Mr.
Cloeren were the focus of a front page story in the August 5,
1998, edition of The Hill.601 Citing a complaint
filed with the FEC, The Hill reported that Rep. DeLay and his
staff had advised Mr. Cloeren on ways to funnel illegal
campaign contributions to Mr. Babin's campaign through
``additional vehicles.'' 602 These additional
vehicles allegedly included Triad Management Services, Inc., an
organization that has previously been accused of illegally
earmarking contributions to Republican
candidates.603 According to The Hill article, Mr.
Cloeren followed Rep. DeLay's advice and suggestions, and
contributed monies to Triad, Triad-related entities, and other
Republican candidates with the full knowledge that those
entities would give the money Mr. Cloeren contributed to them
to Mr. Babin's congressional campaign.604
---------------------------------------------------------------------------
\601\ Texas Donor: GOP Evaded Law, The Hill (Aug. 5, 1998).
\602\ Id.
\603\ Id.
\604\ Id.
---------------------------------------------------------------------------
On August 6, 1998, all the Democratic members of the
Committee (with the exception of Rep. Jim Turner, who recused
himself) wrote to Chairman Burton to request that Chairman
Burton schedule hearings in September 1998 to investigate the
allegations that Majority Whip DeLay, the third-ranking
Republican in the House, may have advised Mr. Cloeren on how to
funnel illegal conduit contributions to Mr. Babin's campaign
and to investigate substantial evidence of improprieties
relating to Triad.605
---------------------------------------------------------------------------
\605\ Letter from Reps. Waxman, Lantos, et al. to Chairman Burton
(Aug. 6, 1998).
---------------------------------------------------------------------------
Chairman Burton did not schedule the hearing requested by
the Democratic members. In fact, he did not even respond to the
letter of August 6, 1998. As a result, the minority staff made
its own attempt to investigate these serious allegations.
According to press accounts, these allegations concerning Rep.
DeLay are also currently the subject of an ongoing criminal
investigation by the Department of Justice Campaign Finance
Task Force.606
---------------------------------------------------------------------------
\606\ Justice Department Probes DeLay, The Hill (Sept. 30, 1998).
---------------------------------------------------------------------------
As part of its investigative efforts, the minority staff
obtained an affidavit from Mr. Cloeren that provides
considerable additional detail about his dealings with Mr.
Babin, Rep. DeLay, and others. In this sworn affidavit, Mr.
Cloeren states that in late 1995, Mr. Babin asked him to raise
$50,000 to help finance Mr. Babin's primary campaign in Orange
County, Texas--a rural area consisting primarily of Democratic
voters and blue-collar workers.607 Mr. Cloeren
states that he told Mr. Babin that he could give Mr. Babin a
corporate check.608 According to Mr. Cloeren, Mr.
Babin responded that he did not care where the money came from
as long as the money came from individuals, and that Mr.
Cloeren should ``work with loyal employees'' to contribute
money to the Babin campaign.609 Mr. Cloeren says
that he agreed to do so and asked various employees and their
families to contribute $1,000 to Mr. Babin with the
understanding that Mr. Cloeren would reimburse
them.610
---------------------------------------------------------------------------
\607\ Affidavit of Peter F. Cloeren, House Committee on Government
Reform and Oversight (Aug. 6, 1998), para. 4-5 (hereafter ``Cloeren
Aff.'') (attached as Exhibit 6).
\608\ Id. at para. 6.
\609\ Id.
\610\ Id. at para. 6-9.
---------------------------------------------------------------------------
According to Mr. Cloeren's affidavit, Mr. Babin asked Mr.
Cloeren to find additional donors to fund Mr. Babin's run-off
and general election campaigns.611 Mr. Cloeren says
he discussed the legality of the corporate reimbursement scheme
with Mr. Babin, and Mr. Babin told him that ``everyone'' raised
campaign money this way and that neither Mr. Cloeren nor Mr.
Babin ``would get caught.'' 612 Mr. Cloeren then
raised $58,000 for Mr. Babin's campaign through this conduit
contribution scheme from his employees.613
---------------------------------------------------------------------------
\611\ Id. at para. 8, 11, 13.
\612}\Id. at para. 12.
\613\ This amount was determined by examining the FEC's List of
Receipts and Expenditures for the Babin campaign. As part of his
cooperation with the government, the government agreed to hold Mr.
Cloeren responsible for $37,000 of the $58,000. Press accounts
uniformly attribute this lower total as the amount of the illegal
conduit contributions Mr. Cloeren funneled to the Babin campaign. See,
e.g., Questions for Tom DeLay, The Hill (Aug. 12, 1998); Dems Call for
Probe of Charge that GOP Laundered Funds, The Hill (Aug. 12, 1998);
Phone Tapes Implicate Candidate, FEC Witness Says, Houston Chronicle,
A37 (Aug. 7, 1998); Texas Donor: GOP Evaded Law--House Leader Among
Those Said to Have Advised Exceeding Limits, The Hill (Aug. 5, 1998).
---------------------------------------------------------------------------
Mr. Cloeren states that Majority Whip Tom DeLay came to
campaign for Mr. Babin in August 1996, and personally urged Mr.
Cloeren to raise more money for Mr. Babin's
campaign.614 According to Mr. Cloeren's affidavit,
on August 29, 1996, following a Babin campaign event, Rep.
DeLay sat next to Mr. Cloeren at a country club luncheon. Mr.
Cloeren states that during the lunch, Rep. DeLay told Mr.
Cloeren that Mr. Babin's campaign needed additional money
because Mr. Babin's Democratic opponent (now Representative Jim
Turner) was receiving money from ``liberal interest groups''
such as labor unions and trial lawyers.615 Mr.
Cloeren says that he replied that he could not raise more money
for Mr. Babin because he, Cloeren, had ``run out of vehicles.''
616 According to Mr. Cloeren, Rep. DeLay responded
specifically that ``it would not be a problem'' for Rep. DeLay
``to find additional vehicles'' for Mr. Cloeren since Rep.
DeLay knew of some organizations and campaigns which could
serve as these vehicles.617
---------------------------------------------------------------------------
\614\ Cloren Aff. at para. 17. At Mr. Babin's request, Mr. Cloeren
paid the $1,320 cost of Rep. DeLay's transportation to and from the
August 29, 1996, Babin campaign event. Mr. Cloeren paid for the travel
with corporate monies which constituted an in-kind contribution to Mr.
Babin's campaign under Federal election law. Neither Mr. Babin nor Rep.
DeLay reported this contribution on their respective FEC disclosure
reports, which constitutes a separate violation of the campaign finance
laws and regulations. Almost two years later, Mr. Babin wrote Mr.
Cloeren to say that it ``has come to [my campaign's] attention'' that
Mr. Cloeren has paid for the air charter for Rep. DeLay and reimbursed
Mr. Cloeren for the cost of Rep. DeLay's travel. See id. at para. 14-
15, and Exs. C, D.
\615\ Id. at para. 17.
\616\ Id.
\617\ Id.
---------------------------------------------------------------------------
Mr. Cloeren states in his affidavit that Rep. DeLay then
turned to his campaign manager, Robert Mills, and stated that
additional money could be funneled to Mr. Babin's campaign
through Triad and other congressional campaigns.618
Mr. Cloeren states that Rep. DeLay told Mr. Cloeren that his
aide, Mr. Mills, would follow-up with Mr. Cloeren on the
details.
---------------------------------------------------------------------------
\618\ Id.
---------------------------------------------------------------------------
Mr. Cloeren states that others present at this lunch also
heard Rep. DeLay discuss with Mr. Cloeren and Mr. Mills how Mr.
Cloeren could use ``additional vehicles'' to funnel even more
money to Mr. Babin's campaign.619 Minority staff
investigators learned that two of Mr. Cloeren's employees, Paul
Peveto and Mike Lucia, were present at the lunch, and at least
one of them told Mr. Cloeren that he heard the ``vehicle''
discussion between Rep. DeLay, Mr. Cloeren, and Mr. Mills.
---------------------------------------------------------------------------
\619\ Id.
---------------------------------------------------------------------------
Mr. Cloeren says that he received a call from Robert Mills
the day after the August 1996 lunch to follow up on Rep.
DeLay's suggestions.620 According to Mr. Cloeren,
Mr. Mills gave Mr. Cloeren the names of two campaigns to which
he could contribute.621 Mr. Cloeren states that Mr.
Mills told Mr. Cloeren that these campaigns, in turn, would
make matching donations to Mr. Babin's campaign.622
Mr. Cloeren states that the two campaigns Mr. Mills identified
for Mr. Cloeren were those of Senator Strom Thurmond and
Stephen Gill, a candidate for Congress in
Tennessee.623
---------------------------------------------------------------------------
\620\ Id. at para. 20.
\621\ Id.
\622\ Id. at para. 20-21.
\623\ Id. at para. 20.
---------------------------------------------------------------------------
FEC records substantiate Mr. Cloeren's statements. They
show that on September 30, 1996, Thurmond donor Gayle O. Averyt
made a $1,000 contribution to the Babin campaign, and during
October 1996, several Gill campaign donors with close links to
Triad contributed $1,000to the Babin campaign.624
Then, on November 1, 1996, Mr. Cloeren contributed $1,000 to the Gill
campaign and on November 5, 1996, he contributed $1,000 to the Thurmond
campaign.625
---------------------------------------------------------------------------
\624\ On Oct. 23, 1996, Gill donors Floyd and Anne Coates made
$1,000 contributions to the Babin campaign and Gill donors Robert L.
Cone and Dawn M. Cone each contributed $500 to the Babin campaign. Each
of these Gill donors is associated with Triad. Floyd and Anne Coates
contributed $15,000 to Triad-supported candidates in the final two
weeks of the 1996 election, and Mr. Coates has admitted making PAC
contributions at Triad's suggestion. Minority Report of the Senate
Committee on Governmental Affairs, Investigation of Illegal or Improper
Activities in Connection with 1996 Federal Election Campaigns, Rpt.
105-167, at 6293 (hereafter ``Senate Minority Report.'') As discussed
more fully in the Senate minority report, Robert Cone provided over
$1.5 million to Triad and its related entities. Id. at 6293-94.
\625\ FEC Records.
---------------------------------------------------------------------------
According to Mr. Cloeren, Mr. Mills also told Mr. Cloeren
in their telephone call following the August 1996 lunch meeting
that an additional way Mr. Cloeren could get money to Mr.
Babin's campaign was to give money to certain groups who would
then turn around and contribute matching donations to Mr.
Babin's campaign. Mr. Cloeren says that Mr. Mills specifically
told Mr. Cloeren that Mr. Mills knew of certain organizations
which would agree to take any contribution Mr. Cloeren made and
then earmark Mr. Cloeren's money for Mr. Babin's
campaign.626
---------------------------------------------------------------------------
\626\ Cloeren Aff., para. 21.
---------------------------------------------------------------------------
After his telephone conversation with Mr. Mills about how
to give additional money to Mr. Babin's campaign without
appearing to give money directly to Mr. Babin, Mr. Cloeren says
that he received further telephone calls to pressure him to
contribute money to groups that would agree to give Mr. Babin's
campaign the identical amount that Mr. Cloeren donated to the
groups. Mr. Cloeren states that he received these follow-up
calls from Mr. Babin, Carolyn Malenick--who identified herself
to Mr. Cloeren as the head of Triad Management Services, Inc.--
and Walter Whetsell, a Babin campaign consultant.627
---------------------------------------------------------------------------
\627\ Id. at para. 22, 23, 25.
---------------------------------------------------------------------------
Mr. Cloeren recalls one phone call where Mr. Whetsell told
him that a Triad affiliate, Citizens for Reform, had already
made its ``pre-arranged contributions'' to Mr. Babin's
campaign.628 Based on this phone call, Mr. Cloeren
says that he and his wife each donated $10,000 to Citizens for
Reform on November 1, 1996.629 According to his
affidavit, the only reason that Mr. Cloeren made these
contributions was to benefit the Babin campaign. Mr. Cloeren
states that Mr. Babin, Carolyn Malenick, and Mr. Whetsell each
told Mr. Cloeren that the entire $20,000 contribution Mr.
Cloeren and his wife made to Citizens for Reform would go to
help the Babin campaign.630 Mr. Cloeren also states
that Triad President Carolyn Malenick specifically told him
that his contributions to Citizens for Reform would be used
exclusively to produce campaign commercials to help Mr. Babin's
campaign, and that Mr. Babin's campaign knew that the monies
Mr. Cloeren donated to Citizens for Reform would be used for
this purpose.631
---------------------------------------------------------------------------
\628\ Id. at para. 23.
\629\ Id.
\630\ Id.
\631\ Id.
---------------------------------------------------------------------------
In search of even more ``vehicles'' to funnel money to his
campaign, Mr. Babin personally solicited Mr. Cloeren for a
$5,000 contribution to a PAC named Citizens United Political
Victory Fund (``Citizens United''), according to Mr.
Cloeren.632 Mr. Cloeren says that Mr. Babin told Mr.
Cloeren that Citizens United would send $5,000 to Mr. Babin's
campaign if Mr. Cloeren donated $5,000 to Citizens
United.633 Mr. Cloeren says that he made a $5,000
donation to Citizens United on October 14, 1996, with the
intent of benefitting Mr. Babin's campaign for
Congress.634 FEC records show that Citizens United
contributed $5,000 to Mr. Babin's campaign on the same day that
Mr. Cloeren says that he made his $5,000 donation to Citizens
United.635
---------------------------------------------------------------------------
\632\ Id. at para. 24.
\633\ Id.
\634\ Id.
\635\ FEC Disclosure Reports of Brian Babin for Congress '96 and
Citizens United Political Victory Fund.
---------------------------------------------------------------------------
According to Mr. Cloeren's affidavit, Mr. Babin, Ms.
Malenick, and Mr. Whetsell all used the names Citizens for
Reform, Citizens United, and Triad
interchangeably.636 Mr. Cloeren says that Ms.
Malenick, Mr. Babin, and others led Mr. Cloeren to believe that
Triad was the umbrella name for all these different
groups.637 Mr. Cloeren states that Mr. Babin also
told Mr. Cloeren that Triad and Citizens for Reform were the
same entity, and that the various other non-campaign
organizations which could send money to Mr. Babin that the two
had discussed ``all ran together.'' 638
---------------------------------------------------------------------------
\636\ Cloeren Aff., para. 25.
\637\ Id. at para. 25.
\638\ Id. at para. 25.
---------------------------------------------------------------------------
Mr. Cloeren says that he had never before made a financial
contribution to a Congressional campaign and had virtually no
knowledge of the campaign finance laws before becoming involved
in the Babin campaign.639 Mr. Cloeren states in his
affidavit:
---------------------------------------------------------------------------
\639\ Id. at para. 1-2.
I would not have participated in the conduit
contributions scheme if Mr. Babin had not suggested it
to me. I would not have given any of my money to the
Triad entity Citizens for Reform, Citizens United, or
to the campaigns of Senator Thurmond and Mr. Gill if I
had not been told that these groups would effectively
use every dollar I gave them for the Babin
campaign.640
---------------------------------------------------------------------------
\640\ Id. at para. 31.
Rep. DeLay, Mr. Babin, and others implicated by Mr. Cloeren
have specifically denied these allegations.641
Because Chairman Burton has refused to investigate these
issues, the members of the Committee are not in a position to
evaluate all the facts. Nonetheless, it is clear that Mr.
Cloeren's allegations provide specific and credible evidence of
wrongdoing by Rep. DeLay. A full and fair examination is needed
to learn what Rep. DeLay and his staff knew about the role of
Triad and other groups who violated federal election laws, and
whether the Majority Whip and his staff counseled and
facilitated others to evade the strictures of the election law.
---------------------------------------------------------------------------
\641\ See, e.g., Texas Donor: GOP Evaded Law--House Leader Among
Those Said to Have Advised Exceeding Limits, The Hill (Aug. 5, 1998);
Phone Tapes Implicate Candidate, FEC Witness Says, Houston Chronicle,
A37 (Aug. 7, 1998); Dems Call for Probe of Charge that GOP Laundered
Funds, The Hill (Aug. 12, 1998); Questions for Mr. DeLay, The Hill
(Aug. 12 1998); Justice Department Probes Delay, The Hill (Sept. 30,
1998).
---------------------------------------------------------------------------
3. Conduit Contribution Scheme Involving Thomas Stewart
Thomas J. Stewart, the Chief Executive Officer of the
multi-billion dollar Services Group of America company
organized and participated in another conduit scheme that
benefitted Republicans. This multi-year scheme funneled
$120,000 to ten Republican candidates between 1990 and
1996.642 Similar to the other conduit contribution
schemes discussed in this section, the Stewart/Services Group
conduit contribution scheme involved illegally reimbursing
employees and their spouses and family members for
contributions they made to candidates and to political action
committees. Unlike the alleged conduit contribution scheme
involving Rep. DeLay, Mr. Cloeren, and Mr. Babin, however,
there is no evidence that any of the candidates who received
the illegal contributions knew that the monies they received
were illegal conduit contributions.
---------------------------------------------------------------------------
\642\ Tycoon Fined $5 Million for Illegal GOP Gifts, Portland
Oregonian (Mar. 18, 1998).
---------------------------------------------------------------------------
Mr. Stewart devised the illegal conduit contribution scheme
with Dennis J. Specht, the Chief Financial Officer of Food
Services of America (FSA). FSA is a subsidiary of the Services
Group of America.643 Press reports quote federal
investigators as saying that Mr. Stewart and Mr. Specht
arranged for FSA employees to receive bonuses with the
understanding that this money would be contributed to specific
candidates or to the company's own political action
committee,644 which would then itself direct the
money to the candidates. Mr. Specht also served as treasurer of
Service Group of America's PAC.645 One FSA employee
confirmed at a deposition that he had received a $1,000 bonus
in 1990, but had been required to send that $1,000 to Service
Group's PAC.646
---------------------------------------------------------------------------
\643\ Businessman Gets $5 Million Fine for Fund-raising Fraud,
Baltimore Sun (Mar. 19, 1998).
\644\ Id.
\645\ Id.
\646\ Id.
---------------------------------------------------------------------------
Mr. Stewart, Mr. Specht, and FSA all pled guilty on March
18, 1998, to the criminal charges filed against them relating
to this conduit contribution scheme. FSA pled guilty to 24
misdemeanor counts of federal election law violations, and was
fined $4.8 million for its participation in the conduit
contribution scheme.647 Mr. Stewart and Mr. Specht
each pled guilty to one count of violating the federal election
laws; each was fined $100,000, ordered to serve a 60-day
sentence of home confinement, ordered to perform 160 hours of
community service at soup kitchens and homeless shelters, and
placed on probation for one year.648 Mr. Stewart
also agreed to pay a fine to Washington State for his violation
of state election laws.
---------------------------------------------------------------------------
\647\ Id.
\648\ Seattle Man Pleads Guilty to Illegal Donations He Reportedly
Contributed to Republican Candidates, Causes through Employees,
Milwaukee Journal Sentinel (Mar. 19, 1998).
---------------------------------------------------------------------------
Less than six months after Mr. Stewart pled guilty to his
criminal violation of the federal election laws, Speaker Newt
Gingrich and other politicians attended a GOP picnic at Mr.
Stewart's home.649 Speaker Gingrich refused to
provide the press with his views about the propriety of holding
a Republican fund raiser at Mr. Stewart's island home, and
``walled himself off from reporters after arriving by private
helicopter.'' 650
---------------------------------------------------------------------------
\649\ Gingrich Unruffled at GOP Fund-raiser: Democrats in
Washington, State Fumed that the Host Once Violated Campaign Finance
Laws, but Republicans Laughed Them Off as Hypocrites, Atlanta Journal/
Atlanta Constitution (Aug. 23, 1998).
\650\ Id.
---------------------------------------------------------------------------
4. Conduit Contribution Scheme Involving Simon Fireman and Aqua-
Leisure Industries, Inc.
In a conduit contribution scheme that began in 1991 and
lasted into 1995, Republican activist Simon Fireman provided
approximately $94,000 in conduit contributions to Republicans.
Mr. Fireman founded a company called Aqua-Leisure in 1970, and
succeeded in turning it into one of the world's largest
distributors of aquatic sports equipment.651 Mr.
Fireman became an active Republican during the Reagan
administration, and was appointed to the Board of Directors of
the Export-Import Bank both by Presidents Reagan and
Bush.652
---------------------------------------------------------------------------
\651\ Senate Minority Report, 7375.
\652\ Id. Mr. Fireman had originally been a Democrat and was
appointed to several Presidential trade committees by President Carter
and President Reagan.
---------------------------------------------------------------------------
Mr. Fireman first began funneling conduit contributions
during the 1992 election cycle. During that election cycle, Mr.
Fireman committed to raise money for the Bush-Quayle campaign.
According to Carol A. Nichols, Mr. Fireman's executive
assistant, when Mr. Fireman found it difficult to meet the fund
raising amounts he had promised, he devised a scheme to solicit
Aqua-Leisure employees and to reimburse them for the
contributions they would make to the Bush-Quayle
campaign.653 Under this scheme, Mr. Fireman provided
approximately $21,000 to his employees at Aqua-Leisure
Industries, Inc., so that the employees could contribute to the
1992 campaign of President Bush and Vice President
Quayle.654 Ms. Nichols stated that Mr. Fireman met
with her to discuss which Aqua-Leisure employees could be
solicited to make contributions.655 Once an employee
agreed to participate, Ms. Nichols collected a personal check
from the individual and reimbursed them with cash from an
account Mr. Fireman controlled.656 Mr. Fireman also
loaned money from Aqua-Leisure's corporate account to a
nonemployee who, in turn, gave that money to a separate set of
contributors to make contributions to the Bush-Quayle
campaign.657 Mr. Fireman also funneled $24,000 to
the RNC in 1992 by giving Aqua-Leisure money to six individuals
who used the money to make separate $4,000 contributions to the
RNC.658
---------------------------------------------------------------------------
\653\ July 23, 1997 FBI Memorandum of Interview with Carol A.
Nichols, printed in Senate Minority Report, 7397-99.
\654\ Senate Committee on Governmental Affairs, Hearings on
Investigation of Illegal or Improper Activities in Connection with 1996
Federal Election Campaigns 105th Cong., 1st Sess., (1997). See also
Criminal Information, United States v. Simon Fireman, Carol Nichols,
and Aqua-Leisure Industries, Inc. (D. Mass. 1996), reprinted in Senate
Minority Report, 7401-23.
\655\Id.
\656\ Id.
\657\ Id.
\658\ Id.
---------------------------------------------------------------------------
Mr. Fireman continued to funnel conduit contributions to
Republicans in the 1996 election cycle. In 1995, Mr. Fireman
became a national vice chairman of Senator Bob Dole's
presidential campaign finance committee. During the time he
served as a Dole finance committee vice chair, Mr. Fireman was
also orchestrating a scheme to funnel $69,000 to the Dole
campaign through conduit contributors. Mr. Fireman also loaned
additional money to an unidentified individual, so that the
individual could recruit additional persons to participate in
the illegal conduit contribution scheme.659 Mr.
Fireman hoped that he would obtain a position in a Dole
administration as a reward for his largesse. The criminal
information to which Mr. Fireman pled guilty stated that ``one
goal and objective, among others, of Simon C. Fireman's secret
scheme to funnel money to the Presidential campaign of Robert
C. Dole was to obtain . . . a position with the United States
government.'' 660
---------------------------------------------------------------------------
\659\ Id. The information identified the outside individual as ``an
individual known to the United States Attorney.''
\660\ Id.
---------------------------------------------------------------------------
Mr. Fireman entered a guilty plea to 11 counts of the
criminal information, and he and his company agreed to pay a $6
million fine. Aqua-Leisure Industries pled guilty to 70 counts
concerning the scheme, and Carol Nichols pled guilty to one
count of conspiracy relating to the scheme.661
---------------------------------------------------------------------------
\661\ Id. at 7375.
---------------------------------------------------------------------------
The Senate minority report noted that the criminal
investigation of Mr. Fireman revealed that Mr. Fireman may have
funneled some foreign money to the Dole campaign through his
conduit contribution scheme. Mr. Fireman formed a trust in Hong
Kong, known as Rickwood Ltd. in 1985. Mr. Fireman acknowledged
in his guilty plea that he used the trust to conceal certain
expenditures that he wished to make.662 The criminal
information recited that the Rickwood trust maintained a U.S.
bank account, but received wire transfers from Hong
Kong.663 The Hong Kong funds originated from
Greyland Trading Company, a Hong Kong-based company which Mr.
Fireman had acquired in 1988.664 All of the money
used to reimburse the Aqua-Leisure conduit contributors came
from the Rickwood trust bank account,665 and was
withdrawn in a way to avoid detection and reporting by the bank
where the account was maintained.666
---------------------------------------------------------------------------
\662\ Criminal Information, United States v. Simon Fireman, Carol
Nichols, and Aqua-Leisure Industries, Inc. (D. Mass. 1996), reprinted
in Senate Minority Report, 7401-23.
\663\ Id.
\664\ July 23, 1997, FBI Memorandum of Interview with Carol A.
Nichols, reprinted in Senate Minority Report, 7397-99.
\665\ Id.; Criminal Information, United States v. Simon Fireman,
Carol Nichols, and Aqua-Leisure Industries, Inc. (D. Mass. 1996)
reprinted in Senate Minority Report, 7401-23.
\666\ Id.
---------------------------------------------------------------------------
The criminal investigation of Mr. Fireman's conduit
contributions to the Dole campaign produced no evidence that
anyone at the Dole campaign knew that Mr. Fireman may have been
contributing foreign money to the campaign and no evidence that
the Dole campaign knew that the contributions from the Aqua-
Leisure Industries employees were illegal conduit
contributions.667 Indeed, Senator Dole disclaimed
any knowledge that the contributions had been illegal and
stated, ``[i]n this business, you don't know who's giving you
money. . . . We turned it over to the FEC.'' 668
---------------------------------------------------------------------------
\667\ Senate Minority Report, 7376. The Dole campaign placed all
the donations involving Fireman into an escrow account pending the
outcome of the criminal investigation, and turned the contributions
over to the U.S. Treasury following Fireman's guilty plea.
\668\ Common Cause Joins Dole's Call for Inquiry Senator's Campaign
Has Requested the FEC Check into Donations, Kansas City Star (Apr. 24,
1996).
---------------------------------------------------------------------------
5. Conduit Contribution Scheme Involving Empire Sanitary Landfill
The Dole campaign and other 1996 and 1994 Republican
campaigns--including the campaigns of Representatives Bill
Paxon and Jon Fox--received illegal conduit contributions from
Empire Sanitary Landfill, Inc., in Scranton,
Pennsylvania.669 The upper management of the company
solicited campaign contributions from Empire Sanitary's
employees, family members, and business associates in addition
to contributing monies themselves.670 Management
reimbursed themselves and the donors they had solicited with
corporate funds, thereby disguising from the various campaigns
that Empire Sanitary was the true source of the donated
monies.671 These actions violated the federal law
that bars corporations from donating money to a political
campaign, 672 as well as the law that bars
individuals from contributing to a campaign in the name of
another person. Empire Sanitary pled guilty to a 40-count
criminal information relating to the illegal conduit
contribution schemes on October 7, 1997.673 As part
of its plea agreement, Empire Sanitary agreed to pay an $8
million fine.674
---------------------------------------------------------------------------
\669\ Empire Sanitary Landfill made illegal conduit contributions
to the following campaigns: the 1996 Dole campaign ($80,000), Senator
Arlen Specter's 1996 campaign ($10,000), Senator Rick Santorum's 1994
campaign ($6,000), then National Republican Congressional Committee
Chairman Representative Bill Paxon's 1996 campaign ($1,000),
Representative Jon Fox's 1994 campaign ($3,000), Representative Frank
Pallone's 1994 campaign ($3,000), 1994 New Jersey Republican Senate
candidate Chuck Haytaian's campaign ($10,000), 1996 New Jersey
Republican Senate candidate Richard Duhaime's campaign ($5,000), the
Clinton/Gore `96 Primary Committee ($10,000), and Senator Max Baucus's
1996 campaign ($1,000). Indictment, United States v. Renato P. Mariani,
Michael L. Serafini, Leo R. Del Serra, Alan W. Stephens, Robert Giglio,
and Frank Serafini, U.S. District Court for the Middle District of
Pennsylvania, reprinted in Senate Minority Report 7439-7498.
\670\ Senate Minority Report, 7377.
\671\ Id. Just as with the Fireman/Aqua-Leisure Industries illegal
conduit contributions discussed in this section, there is no evidence
that any of the campaigns receiving illegal contributions from Empire
Sanitary knew that the contributions were problematic. Id., 7377.
\672\ 2 U.S.C. Sec. 441b(a).
\673\ Plea Agreement, United States v. Empire Sanitary Landfill,
Inc., U.S. District Court for the Middle District of Pennsylvania,
reprinted in Senate Minority Report, 7425-7431.
\674\ Id.
---------------------------------------------------------------------------
The alleged principals of the Empire Sanitary conduit
contribution scheme were named in a 140-count indictment
relating to the contribution scheme, and are still awaiting
trial.675
---------------------------------------------------------------------------
\675\ Also named in the indictment were business associates of
Empire Sanitary and a Pennsylvania state representative in whose
district Empire Sanitary did business. See, Indictment, United States
v. Renato P. Mariani, Michael L. Serafini, Leo R. Del Serra, Alan W.
Stephens, Robert Giglio, and Frank Serafini, U.S. District Court for
the Middle District of Pennsylvania, reprinted in Senate Minority
Report, 7439-7498.
---------------------------------------------------------------------------
6. Conduit Contribution Scheme Involving DeLuca Liquor & Wine Ltd.
Ray Norvell, the vice president in charge of Nevada
operations for DeLuca Liquor & Wine, Ltd., orchestrated another
scheme to funnel illegal conduit contributions to the Dole
campaign.676 DeLuca Liquor & Wine, Ltd., is a Las
Vegas company which is one of Nevada's largest distributors of
liquor, wine, and beer.677 Five DeLuca employees and
their spouses contributed a total of $10,000 to the Dole
campaign during a three-day period in May 1995. According to
press accounts, at least two of the contributors admitted that
DeLuca had given them the money to make the
contributions.678
---------------------------------------------------------------------------
\676\ Exec Pays $100,000 Fine in Dole Contribution, Las Vegas
Review-Journal (Sept. 22, 1998).
\577\ Senate Minority Report, 7378-79.
\678\ More Donations to Dole Campaign Possibly Illegal: Candidate
Was Not Aware of Company's Actions, Aide Says, Kansas City Star (Sept.
29, 1996).
---------------------------------------------------------------------------
Mr. Norvell pled guilty in June 1998 to two misdemeanor
counts of violating the federal election laws: one count for
making an illegal campaign contribution and one for causing the
name of another person to be used in connection with a campaign
contribution.679 Mr. Norvell was fined $100,000, and
his plea agreement provided that DeLuca would not be prosecuted
for reimbursing Mr. Norvell and the other DeLuca employees for
their illegal conduit contributions to the Dole
campaign.680 At the time he devised the criminal
conduit contribution scheme, Mr. Norvell thought that he had
merely been clever. Mr. Norvell told a newspaper reporter that
he knew federal election law prohibited corporate
contributions, so he devised a scheme that he believed
circumvented the law. ``I gave them $5,000 extra salary to give
to political campaigns and also charities. . . . It's not
illegal, I hope. . . . I know you can't give company checks.''
681
---------------------------------------------------------------------------
\679\ Exec Pays $100,000 Fine in Dole Contribution, Las Vegas
Review-Journal (Sept. 22, 1998).
\680\ Id.
\681\ More Donations to Dole Campaign Possibly Illegal, Kansas City
Star (Sept. 29, 1996).
---------------------------------------------------------------------------
The Senate minority report analyzed documents subpoenaed by
the Senate Governmental Affairs Committee which showed that
DeLuca had issued checks for $2,000 each to five of its
employees on May 18, 1995. The corporate payment stub for one
of the checks contained the notation ``Campaign-Dole.''
682 Between May 19 and May 22, 1995, each of the
five employees 683 who had received the checks, and
their spouses, contributed $1,000 to the Dole
campaign.684 Thus, within four days, the $10,000
that DeLuca had issued to its employees had made its way to the
Dole campaign.
---------------------------------------------------------------------------
\682\ Senate Minority Report, 7379. Four of the checks--including
the check with the ``Campaign-Dole'' notation--were consecutively
numbered. Id., 7499-7502.
\683\ The five DeLuca employees were: Ray E. Norvell, Dale
McIntire, Kenneth W. Leslie, Bruce Kobrin, and James P. O'Connor. Id.,
7379.
\684\ Id.
---------------------------------------------------------------------------
Michelle McIntire, the spouse of a DeLuca employee who
contributed to the Dole campaign, told reporters that she would
not have given money to the Dole campaign if DeLuca had not
paid for the donation.685 Ms. McIntire stated,
``[DeLuca] gave us the money. That was something the company
wanted [my husband] to do, and so that's what we did. It's not
anything that is uncommon.'' 686
---------------------------------------------------------------------------
\685\ More Donations to Dole Campaign Possibly Illegal: Candidate
Was Not Aware of Company's Actions, Aide Says, Kansas City Star (Sept.
29, 1996).
\686\ Id.
---------------------------------------------------------------------------
The Senate minority report did not uncover any evidence
that anyone from the Dole campaign knew that DeLuca had
illegally reimbursed its employees for the political
contributions they made to the Dole campaign.687
---------------------------------------------------------------------------
\687\ Senate Minority Report, 7379. When it learned that the DeLuca
campaign contributions might be illegal conduit contributions, a
spokesperson for the Dole campaign commented, ``the campaign has been
most vigilant in our fund-raising efforts and we're completely unaware
of DeLuca's procedures and actions.'' Some Las Vegas Contributions to
Dole Campaign May Be Illegal, Fort Worth Star-Telegram (Oct. 2, 1996).
---------------------------------------------------------------------------
B. Republicans Have Received Foreign Campaign Contributions
The majority report extensively discusses various
allegations of foreign contributions to Democratic campaign
committees. There is, however, extensive evidence that
Republicans have also received foreign campaign contributions.
Indeed, to the extent that it is illegal to receive foreign
campaign contributions, the evidence of Republican wrongdoing
is in important respects more serious than the evidence of
Democratic wrongdoing.688 Republican Congressman Jay
Kim is the only elected official to be convicted of knowingly
soliciting illegal foreign campaign contributions.
Additionally, the only specific and credible evidence
implicating the head of a political party in a scheme to
solicit contributions from foreign sources involves Haley
Barbour, the former Chairman of the Republican National
Committee (RNC). This evidence suggests that Chairman Barbour
personally solicited a $2.1 million loan guarantee from
billionaire Hong Kong industrialist Ambrous Tung Young for the
benefit of the RNC.
---------------------------------------------------------------------------
\688\ A recent federal court decision has held that it is not
illegal to accept soft-money contributions from foreign sources. See
United States v. Trie, Crim. No. 98-0029, Slip. Op. (D.D.C Oct. 9,
1998). The implications of this decision are discussed in Part III and
V of this report.
---------------------------------------------------------------------------
There is also substantial evidence that of the $2.8 million
in foreign contributions accepted by Republicans, approximately
$1.1 million has not been returned. Foreign funds that appear
to remain in Republican coffers include:
$782,460 of a $2.1 million contribution from
Hong Kong businessman Ambrous Young to the National
Policy Forum (NPF), a subsidiary of the RNC;
689
---------------------------------------------------------------------------
\689\ The NPF defaulted on approximately $1.6 million of the $2.1
million loan guaranteed by Mr. Young. Later, the RNC returned
approximately $700,000 to Mr. Young, but kept the remainder. The money
to pay Mr. Young was wired directly from RNC accounts to Hong Kong.
Senate Minority Report, 4670-4671.
---------------------------------------------------------------------------
a $25,000 contribution from the Pacific
Cultural Foundation, a group affiliated with the
Taiwanese government, to the NPF; 690
---------------------------------------------------------------------------
\690\ Letter from John R. Bolton to Michael Hsu (Aug. 7, 1996) (NPF
003200, 003204) (attached as Exhibit 12).
---------------------------------------------------------------------------
$95,000 of $205,000 in contributions from
German citizen Thomas Kramer to the Florida Republican
Party; 691
---------------------------------------------------------------------------
\691\ $323,000 Fine Levied for Foreign Contributions, Washington
Post (July 19, 1997).
---------------------------------------------------------------------------
$215,000 of $500,000 in apparently foreign
contributions funneled to the RNC through Michael
Kojima.692
---------------------------------------------------------------------------
\692\ Senate Minority Report, 5414.
---------------------------------------------------------------------------
The RNC has also not returned a $50,000 contribution from
Panda Industries, Inc., a company associated with Ted Sioeng,
to the NPF. The majority report asserts that the DNC must
return all Sioeng-related contributions.693 Under
the standard applied by the majority report, this $50,000
contribution to the NPF should be returned as well.
---------------------------------------------------------------------------
\693\ Majority Report, Chapter III: The Democrats' Failure to
Return Illegal Campaign Contributions.
---------------------------------------------------------------------------
The evidence implicating Rep. Kim, Chairman Barbour, and
other Republican leaders in foreign contribution schemes is
discussed below.
1. Foreign Contributions Solicited by Rep. Jay Kim
On August 11, 1997, Rep. Jay Kim (R-CA) and his wife pled
guilty to knowingly accepting more than $230,000 in illegal
contributions from corporations and foreign donors. Those
guilty pleas marked the conclusion of an extensive
investigation into the financing of Rep. Kim's campaigns. This
investigation also obtained guilty pleas against five South
Korean conglomerates for funneling foreign contributions to the
Kim campaign.
A detailed discussion of the convictions obtained against
Rep. Kim, his wife, and the South Korean companies can be found
in the minority report of the Senate Governmental Affairs
Committee.694 As part of the plea agreement, Rep.
Kim admitted to knowingly violating several campaign finance
laws, including the ban on foreign contributions.695
In addition, there was substantial evidence that Rep. Kim
attempted to obstruct the FBI's investigation into his
campaign.696 Furthermore, the evidence showed that
he knowingly violated campaign laws even after he knew that he
was under investigation.697
---------------------------------------------------------------------------
\694\ Id. at 5683.
\695\ United States v. Jay Kim, et al., Plea Agreement (July 31,
1997).
\696\ The Senate minority report notes that Rep. Kim contacted a
potential witness against him and encouraged him to describe an illegal
contribution as a ``personal loan.'' Senate Minority Report, 5685.
\697\ Id. at 5686 (describing how Rep. Kim's campaign continued to
accept illegal corporate contributions in October of 1996).
---------------------------------------------------------------------------
Despite the substantial evidence of serious wrongdoing,
Rep. Kim received little criticism and no punishment from
Republicans. In 1996, he played a substantial role in the Dole/
Kemp presidential campaign.698 Even after his
conviction, however, the House Ethics Committee has not taken
any disciplinary action against him, and he has been permitted
to retain his chairmanship of a House
subcommittee.699 Republican silence and inaction
regarding Rep. Kim's crimes provides a sharp contrast to the
vocal criticism and vigorous investigation that has been
directed at Democrats.
---------------------------------------------------------------------------
\698\ Shop Talk, Roll Call (Oct. 17, 1996) (``Sophomore Rep. Jay
Kim has found his place in Bob Dole's campaign. The Congressman
appeared . . . in Chicago . . . to announce those who have been named
`Asian-Americans for Bob Dole Ethnic Coalition Co-chairs.' . . . A
press release issued by the Dole campaign described Kim's `stunning
historic victory' [and] cast [Kim] as the `role model' for American
immigrants'').
\699\ On Oct. 9, 1998, the House Committee on Standards of Official
Conduct released a final report on its investigation into Rep. Kim.
That report found that in addition to violating House rules in
accepting illegal campaign contributions, Rep. Kim has also violated
House gift rules. The Committee, however, decided to take no further
action against Rep. Kim because he lost his election and will leave
Congress in 1999. Ethics Panel Ends Rep. Kim Case, Despite New $63,640
Gift Charges, Roll Call (Oct. 13, 1998).
---------------------------------------------------------------------------
2. Foreign Contributions Solicited by Haley Barbour
The Senate Governmental Affairs Committee uncovered
substantial evidence suggestingthat RNC Chairman Haley Barbour
developed and implemented a plan to funnel foreign contributions to the
RNC through the National Policy Forum, a subsidiary of the RNC. As
stated in the minority report of the Committee:
Starting in 1993, Haley Barbour . . . carried out a
scheme to collect foreign money by channeling the funds
through the National Policy Forum. . . . The RNC did
this by arranging for a foreign businessman to put up
collateral for a bank loan to the NPF. Shortly after
the NPF received the loan, it transferred more than $2
million to the RNC which, in turn, channeled the money
into the 1994 congressional races around the country.
700
---------------------------------------------------------------------------
\700\ Senate Minority Report, 4657.
While Mr. Barbour denies any wrongdoing in connection with
the NPF, the Senate minority report sets forth considerable
evidence showing Mr. Barbour's heavy personal involvement in
the planning and execution of the funneling scheme.
Specifically, the Senate minority report notes that:
(1) Mr. Barbour was heavily involved in the formation of
the NPF, and subsequently established himself as chairman of
the NPF while simultaneously serving as Chairman of the
RNC.701
---------------------------------------------------------------------------
\701\ Id. at 4660.
---------------------------------------------------------------------------
(2) Mr. Barbour pushed the idea of soliciting foreign
contributions for the NPF over the objections of the NPF's
president, Michael Baroody, who later resigned.702
In a confidential memo explaining his resignation, Mr. Baroody
criticized Mr. Barbour's ``fascination'' with foreign money and
called the ostensible legal separation between the NPF and the
RNC a ``fiction.'' 703
---------------------------------------------------------------------------
\702\ Id. at 4661.
\703\ Id. at 4662-4663.
---------------------------------------------------------------------------
(3) Mr. Barbour personally solicited Hong Kong businessman
Ambrous Young to provide collateral for the NPF's loan.
704
---------------------------------------------------------------------------
\704\ Id. at 4665-4666.
---------------------------------------------------------------------------
(4) Mr. Barbour personally raised with Mr. Young the
possibility of having the NPF default on the loan so that Mr.
Young's collateral could be used to pay the RNC. 705
---------------------------------------------------------------------------
\705\ Id. at 4669.
---------------------------------------------------------------------------
The Senate minority report also finds that Mr. Barbour's
testimony denying any wrongdoing ``is riddled with
inconsistencies and contradicted by virtually every other
witness with knowledge of the loan transaction.''
706 Specifically, the report notes that Mr.
Barbour's claim that he was ignorant of the foreign source of
the funds is contradicted by several witnesses, including
several high-profile Republicans. 707
---------------------------------------------------------------------------
\706\ Id. at 4673.
\707\ Id. at 4673. Mr. Barbour's associate Fred Volcansek testified
at his Senate deposition that he personally informed Mr. Barbour that
the true source of the loan guaranty money was a Hong Kong company
before the loan guaranty transaction was finalized:
---------------------------------------------------------------------------
Q: Prior to October 13, 1994, did you make Haley Barbour
aware that Mr. Young would be transferring monies from Hong
Kong that would be used to support the collateral used in the
loan guarantee made to the National Policy Forum?
A: Yes, I did. . . .
Q: Do you recall the context in which you made Mr. Barbour
aware of that?
A: I believe that it was in a meeting with Mr. [Donald]
Fierce and Mr. Barbour and Mr. [Dan] Denning discussing this
issue.
Q: Do you recall where that meeting took place?
A: At the Republican National Committee headquarters.
Senate Deposition of Fred Volcansek, 108-09 (July 21, 1997). Hereafter,
citations to Senate depositions refer to depositions conducted by the
Senate Governmental Affairs Committee.
There is compelling evidence that Mr. Barbour and his
associates intended that the RNC would use the foreign money
contributed to the NPF in the 1994 mid-term elections. The
RNC's chief political strategist, Donald Fierce, told Fred
Volcansek, the NPF fundraiser who solicited the contribution
from Mr. Young, that the RNC would use the monies in the fall
elections.708 Mr. Volcansek repeated this
information to the U.S. representatives of Mr. Young and
directly to Mr. Young himself. According to Mr. Volcansek, he
told Mr. Young that ``his guarantee would allow for the loan to
be made and that then the National Policy Forum would be
allowed to be in a position to repay the RNC and the RNC would
be able to use that money in the '94 election cycle.''
709
---------------------------------------------------------------------------
\708\ Id. Mr. Volcansek testified that Mr. Fierce told him that
``they [the RNC] were going to use the money in the '94 election
process in which there were numerous races that they thought they had
an opportunity for and they needed the money back from the NPF that had
been lent to the NPF.'' Id.
\709\ Id.
---------------------------------------------------------------------------
Mr. Barbour and the NPF maintain that the NPF is legally
permitted to accept foreign contributions because it is
independent of the RNC. Their position, however, is
contradicted by the overwhelming weight of the evidence. In
February 1997, the Internal Revenue Service denied the NPF's
tax-exempt organization application because the NPF was a
``partisan'' organization ``designed to promote the Republican
Party and politicians affiliated with the Republican Party.''
710 In addition, the bank utilized by the NPF noted
that the NPF was ``an off-shoot of the Republican National
Committee''; 711 Republican fundraisers and donors
viewed the NPF and RNC interchangeably; 712 and
there were significant irregularities in the RNC's financial
dealings with the NPF. 713 The NPF's
``independence'' was thus, at best, a dubious legal fiction.
---------------------------------------------------------------------------
\710\ Letter from Edward R. Karcher, Internal Revenue Service, to
the National Policy Forum (Feb. 21, 1997) (reprinted in Senate Minority
Report, 4707-19).
\711\ Deposition of Steven S. Walker, Jr., House Committee on
Government Reform and Oversight, Ex. 26 (July 1, 1998). All references
to depositions, unless otherwise noted, will be to depositions
conducted by the House Committee on Government Reform and Oversight.
The bank noted that the NPF and RNC shared top-level management and
recommended that the loan guaranty transaction be approved, in part,
``because of the close relationship between the [NPF] and the
Republican National Committee.'' Id.
\712\ Id. at Ex. 24 (letters from Philip T. Cavannaugh to Haley
Barbour) (attached as Exhibit 13); Ex. 23 (1996 Memorandum from Kevin
Kellum (Team 100) to Haley Barbour) (reprinted in Senate Minority
Report, 4700). As late as 1996, Republican donors and fundraisers
treated contributions to the NPF as tantamount to contributions to the
Republican Party. Kevin Kellum, one of the heads of the RNC's Team 100
fundraising program, sent Mr. Barbour a memorandum in late February
1996 about how best to apportion among various Republican groups--
including the NPF--a $1 million donation from Nevada casino operator
Stephen Wynn. Mr. Kellum's memo proposed three possible ways to divide
the $1 million to various Republican entities. Two of the options
included having Mr. Wynn contribute at least $250,000 to the NPF. The
memo noted that there would be ``less reported'' by the RNC to the FEC
if Mr. Wynn donated money to the NPF rather than more directly to the
RNC. It thus appears that senior Republican fund raisers believed that
a donation to the NPF was equivalent to making a donation to the RNC.
RNC donors also appear to have been told by high-ranking RNC
officials that a contribution to the NPF would benefit the RNC. The
vice president of federal relations for the Chevron Oil Company seems
to have heard this point directly from Mr. Barbour. The Chevron
executive wrote Mr. Barbour in May 1996 as follows: ``I certainly
appreciated the opportunity to visit with you recently and discuss
Chevron's contributions to the Republicans Party and related
organizations. Pursuant to that discussion, I have enclosed checks [of]
$25,000 for the National Policy Forum and $15,000 for the remainder of
the funds for the RNC that we agreed to.'' Deposition of Steven S.
Walker, Jr., 146-48 and Ex. 24 (July 1, 1998). The Chevron letter to
Barbour closed with the Chevron executive thanking Mr. Barbour for
``your willingness to recognize the totality of our efforts on behalf
of the Party.'' Id.
\713\ The RNC and the NPF did not maintain an arms-length financial
relationship, but instead behaved like a single entity. Unexplained
commercial irregularities surround the RNC's initial funding of the NPF
in May 1993, and the NPF never followed ordinary commercial practices
when it borrowed approximately $2.5 million from the RNC over a 15-
month period.
For example, the NPF and RNC signed and executed documents both on
May 1, 1993, and May 11, 1993, to reflect the initial $100,000 loan
from the RNC to the NPF. Each document appears to reflect that it is
the original loan agreement, and there is no indication that the May
11, 1993, documents supersede the May 1 documents. Even though it is a
highly unusual commercial practice to have signed documents from
different dates reflect the exact same transaction, no NPF witness
could explain why the RNC and the NPF executed both documents just 10
days apart. Deposition of Steven S. Walker, Jr., 89-102 and Exs. 15-16
(July 1, 1998). See also Senate Deposition of Kenneth J. Hill, 68, 77-
83 (July 11, 1997). It also appears that the NPF violated the
conditions of the initial $100,000 loan agreement whether the documents
were signed on May 1 or May 11, 1993. The RNC-NPF loan documents
required the NPF to provide the RNC with copies of the NPF's
certificate of incorporation, articles of incorporation, bylaws, and a
resolution of the NPF's board of directors authorizing the NPF to enter
into the loan agreement before the RNC signed and executed the loan
agreement. Since the NPF was not incorporated until May 24, 1993, the
NPF failed to comply with the terms of the loan agreement. Again, NPF
witnesses were unable to offer any explanation for why the NPF received
$100,000 from the RNC in apparent violation of the terms of the loan
agreement and prior to the legal existence of the NPF. Deposition of
Steven S. Walker, Jr., 91, 98-100 and Exs. 15-16 (July 1, 1998); Senate
Deposition of Kenneth J. Hill, 68-70 (July 11, 1997). Mr. Hill
testified that he had ``absolutely no idea'' how the NPF could have
provided documents to the RNC before the NPF came into existence.
Additionally, the NPF made no written requests for any of the $2.5
million in loans from the RNC, did not provide the RNC with any written
explanation for how the NPF would use the money, and did not explain to
the RNC how the NPF would repay the loan amounts. Deposition of Steven
S. Walker, Jr., 100-101, 110 (July 1, 1998). The lack of such basic
formalities strongly suggests that the loan transactions between the
RNC and the NPF were not commercial arms-length transactions.
---------------------------------------------------------------------------
Press accounts indicate that Mr. Barbour is currently under
investigation by the Department of Justice for possible perjury
before the Senate.714 Those same accounts also
indicate that the Department is investigating the underlying
funneling scheme developed by Mr. Barbour.715
---------------------------------------------------------------------------
\714\ Ex-RNC Chairman Denounces News Leaks, Washington Post (Feb.
28, 1998).
\715\ Id.
---------------------------------------------------------------------------
3. Additional Foreign Contributions Solicited by the NPF
The minority has received evidence that the NPF solicited
additional contributions that it knew--or had strong reason to
believe--were from a foreign source. This evidence shows that
in August 1996, the NPF received a $25,000 contribution from
the Pacific Cultural Foundation (PCF), a group affiliated with
the Taiwanese government.716
---------------------------------------------------------------------------
\716\ Ex. 12, Letter from John R. Bolton to Michael Hsu (Aug. 7,
1996) (NPF 003200, 003204).
---------------------------------------------------------------------------
The PCF contribution is significant because it is the only
example of a foreign government contributing to an American
political party. Indeed, documents produced to this Committee
indicate that NPF officials understood the contribution to be
from the Taiwanese government. For example, NPF President John
Bolton acknowledged receipt of the contribution in two letters
to Michael Hsu, a special assistant at the Taipei Economic and
Cultural Representative Office (TECRO), which functions as
Taiwan's unofficial embassy in the U.S.717
Similarly, RNC Chairman Haley Barbour wrote to Jason Hu,
Taiwan's representative to the U.S., and thanked him for the
contribution.718 In his letter to ``Ambassador Hu,''
Mr. Barbour wrote that PCF's ``willingness to underwrite our
Member Trade Briefing is greatly appreciated and enables NPF to
continue to develop and advocate good international policy.''
719
---------------------------------------------------------------------------
\717\ Id. One of the letters states: ``Thank you so much for your
generous contribution.''
\718\ Letter from Haley Barbour to Jason Hu (Aug. 22, 1996) (NPF
003203) (printed in Senate Minority Report, 4772).
\719\ Id.
---------------------------------------------------------------------------
The combined evidence developed by the Senate investigation
and this Committee's investigation makes the activities of the
NPF perhaps the most serious example of potentially illegal
foreign contributions making their way into the U.S. electoral
system. Unlike the allegations involving the DNC, the evidence
involving the NPF directly implicates a national political
party, the RNC, and its Chairman, Haley Barbour, in a scheme to
solicit foreign campaign contributions.
4. Contributions to Republicans from Ted Sioeng
A major figure in the Committee's investigation into
possible foreign contributions is Ted Sioeng. Chairman Burton
has described Mr. Sioeng as ``an Indonesian-born businessman
who travels on a Belize passport, suspected by committee
members of working, along with his family, on behalf of the
Chinese Government interests in the United States.''
720 Mr. Sioeng's business interests include the
export of cigarettes manufactured by the Red Pagoda company,
which is owned by the Chinese government, to the United States
and other countries. According to Chairman Burton, Red Pagoda
cigarettes are ``a convenient way to get money into this
country'' 721 and could be ``used as a vehicle for
the Chinese government to funnel money into the United
States.'' 722
---------------------------------------------------------------------------
\720\ Rep. Dan Burton, Congressional Record, H3054 (May 12, 1998).
\721\ Id.
\722\ Statement of Chairman Burton, House Committee on Government
Reform and Oversight, Business Meeting (May 13, 1998).
---------------------------------------------------------------------------
News reports have suggested that law enforcement
authorities suspect that Mr. Sioeng may have ties to the
Chinese government. For example, Newsweek reported that ``The
FBI suspects that Chinese may have used Sioeng as a `cutout'--a
front man to make illegal contributions appear legitimate.''
723 Similarly, the Washington Post reported that law
enforcement authorities ``had credible intelligence information
indicating [Sioeng] acted on behalf of China to influence U.S.
elections with campaign contributions.'' 724
---------------------------------------------------------------------------
\723\ A Break in the Case, Newsweek (May 19, 1997).
\724\ Senate Panel is Briefed on China Probe Figure; Officials Say
Evidence May Link L.A. Businessman to Election Plan, Washington Post
(Sept. 12, 1997).
---------------------------------------------------------------------------
As discussed in Part III, the Committee's investigation
into Mr. Sioeng was inconclusive. The investigation did not
substantiate the allegations that Mr. Sioeng is an agent of the
Chinese government. At the same time, the investigation did not
conclusively exonerate Mr. Sioeng.
The Committee's investigation did demonstrate, however,
that it was Republicans--not Democrats--who had the closest
personal and political ties to Mr. Sioeng. Although Chairman
Burton repeatedly denied minority requests to fully investigate
the links between Mr. Sioeng and senior Republican leaders,
enough evidence was obtained by the Committee to show that Mr.
Sioeng has ties to major Republican leaders, candidates, and
organizations.
Most of these ties centered around Mr. Sioeng's
relationship with California State Treasurer Matthew K. Fong, a
Republican who is currently running for the United States
Senate. The Committee's investigation revealed that Mr. Sioeng
and his family were major financial supporters of Mr. Fong's
campaigns, as well as family friends and acquaintances. Indeed,
the only contributions made by Mr. Sioeng personally were
$50,000 in contributions he made to Mr. Fong. The Committee's
investigation also revealed that Mr. Sioeng enjoyed personal
access to Speaker of the House Newt Gingrich.
The majority report concludes that ``many fundamental
questions remain unanswered'' in the Committee's investigation.
The minority agrees that Mr. Sioeng's activities merit further
investigation, but it is his ties to Republicans--not
Democrats--that would seem to warrant the closest scrutiny.
a. Ted Sioeng's Relationship with Matt Fong
The elected official with the closest relationship with Ted
Sioeng is California State Treasurer Matt Fong, who is
currently the Republican candidate for the U.S. Senate in
California. No other elected official--either Democratic or
Republican--had a personal relationship with Mr. Sioeng as
close as Mr. Fong's. Moreover, Mr. Fong was the single largest
individual recipient of Mr. Sioeng's campaign contributions.
The Committee took the deposition of Mr. Fong on March 2
and April 9 of 1998. Mr. Fong's deposition was also taken by
the Senate Governmental Affairs Committee on September 19,
1997. According to Mr. Fong, he first met Mr. Sioeng in 1988,
at a Republican rally held in Los Angeles.725 After
their initial meeting, the two developed a friendship based on
regular contact at Asian-American community events. Mr. Fong
told the Committee that the Sioeng family was very active in
Chinese community activities and charities, and that he would
frequently see them at various community events.726
In September 1994, the Sioeng family made its first
contribution to Mr. Fong when Jessica Elnitiarta, Ted Sioeng's
oldest daughter, contributed $2,000 to Mr. Fong's campaign for
State Treasurer.727
---------------------------------------------------------------------------
\725\ Deposition of Matthew K. Fong, v. 1, 15 (Mar. 2, 1998).
\726\ Id. at v. 1, 16.
\727\ Id. at v. 1, 18-19.
---------------------------------------------------------------------------
In November 1994, Mr. Fong was elected California State
Treasurer. After the election, Mr. Fong's campaign suffered
from a debt of several hundred thousand dollars.728
As a result, Mr. Fong continued fundraising after the election,
soliciting Mr. Sioeng and his family for
contributions.729 His appeal to the Sioeng family
centered around two $100,000 contributions he received in late
1994 from San Diego Chargers owner Alex Spanos. Mr. Spanos, who
is of Greek-American descent, had urged Mr. Fong to challenge
the Chinese-American community to match the large
contributions.730 At the end of 1994 and beginning
of 1995, Mr. Fong conveyed that challenge to Mr. Sioeng and his
family whenever he saw them.731
---------------------------------------------------------------------------
\728\ Id. at v. 1, 21.
\729\ Id. at v. 1, 22.
\730\ Id. at v. 1, 26.
\731\ Id. at v. 1, 27.
---------------------------------------------------------------------------
In April 1995, Mr. Fong visited Mr. Sioeng's
office.732 As discussed below, Mr. Fong gave
conflicting testimony concerning this April meeting with Mr.
Sioeng. It is undisputed, however, that the meeting resulted in
$50,000 in contributions to Mr. Fong's campaign by Mr. Sioeng.
Those contributions came in the form of two checks drawn on the
account of Sioeng San Wong, which is Ted Sioeng's Chinese name.
---------------------------------------------------------------------------
\732\ Id. at v. 1, 28.
---------------------------------------------------------------------------
These contributions appear to be illegal under federal law,
which provides that it is illegal for a foreign national ``to
make any contribution of money or other thing of value . . . in
connection with an election to any political office.''
733
---------------------------------------------------------------------------
\733\ 2 U.S.C. Sec. 441e; 11 CFR 110.4(a) (``A foreign national
shall not directly or through any other person make a contribution . .
. in connection with any local, State, or Federal office''). The recent
decision by the United States District Court for the District of
Columbia, finding that it is legal for a foreign national to contribute
``soft money'' to a political party, concerned contributions to a
national party committee. See United States v. Trie, Crim. No. 98-0029-
1, Slip. Op. (D.D.C. Oct. 9, 1998). The opinion, however, does not
address contributions to state candidates.
---------------------------------------------------------------------------
The Sioeng family's final contribution to Mr. Fong's
campaign was a $50,000 contribution on December 14, 1995, from
a Sioeng family company, Panda Estates Investment, Inc. Four
days later, Mr. Fong wrote a letter of welcome for an
international badminton tournament being hosted and organized
by the Sioeng family. Mr. Fong denied that there was any
connection between the $50,000 contribution and his
letter.734
---------------------------------------------------------------------------
\734\ Deposition of Matthew K. Fong, v. 2, 107.
---------------------------------------------------------------------------
The $102,000 in total campaign contributions made by the
Sioeng family to Mr. Fong's campaigns make Mr. Fong the largest
individual beneficiary of the Sioeng family's political
donations. The relationship between Mr. Fong and the Sioeng
family, however, extends beyond the family's support for Mr.
Fong's political career. The evidence shows that Mr. Fong also
maintained a personal relationship with the family. He attended
the weddings of two of Mr. Sioeng's daughters and gave a toast
at one of those weddings.735 Indeed, Mr. Fong once
told the San Francisco Chronicle that Mr. Sioeng was ``an old
friend.'' 736
---------------------------------------------------------------------------
\735\ Deposition of Glenville Stuart, 94 (Feb. 18, 1998);
Deposition of Matthew K. Fong, v. 1, 16; Treasurer May Return
Contribution, San Francisco Chronicle (Apr. 22, 1997).
\736\ Id.
---------------------------------------------------------------------------
In April 1997, Mr. Sioeng's political contributions to Mr.
Fong's campaign began to receive significant press scrutiny.
Shortly thereafter, Mr. Fong's campaign returned the
contributions.
b. Ted Sioeng's Relationship with Speaker Gingrich
Evidence developed by the Committee demonstrates that
through his relationship with Mr. Fong, Mr. Sioeng gained
personal access to Speaker Gingrich. In July of 1995,
approximately three months after accepting $50,000 from Mr.
Sioeng, Mr. Fong invited Mr. Sioeng to a private meeting with
Speaker Gingrich in the Speaker's Capitol office.\737\ Mr.
Sioeng's initial reaction was ``Who's Speaker Gingrich and
what's a Speaker?'' \738\ Mr. Fong explained who Speaker
Gingrich was and Mr. Sioeng called back a short time later to
ask if his son could also attend the meeting.\739\ When Mr.
Fong indicated that his son could attend, Mr. Sioeng accepted
the invitation.\740\ Mr. Fong testified that he extended this
invitation to Mr. Sioeng out of gratitude for the large
contributions he had received.\741\ He also acknowledged his
hope that the invitation would make Mr. Sioeng more willing to
make contributions in the future.\742\
---------------------------------------------------------------------------
\737\ Deposition of Matthew K. Fong, v. 1, 65.
\738\ Id. at v. 1, 68.
\739\ Id. at v. 1, 68-69; the ``son'' who attended the meeting was
actually a son-in-law.
\740\ Id. at v. 1, 68; v. 2,145.
\741\ Id. at v. 1, 68; v. 2,145.
\742\ Id. at v. 2,145.
---------------------------------------------------------------------------
The meeting with the Speaker occurred on July 12,
1995.\743\ Mr. Fong testified that he had an open invitation to
stop by the Speaker's office and bring guests.\744\ The actual
scheduling of the visit, however, was arranged by Steve
Kinney.\745\ Mr. Kinney served as chief strategist, fundraiser,
and pollster for Mr. Fong's 1994 campaign.\746\ Mr. Kinney had
also previously done fundraising and advance work for Speaker
Gingrich.\747\ After the meeting, Mr. Fong went to dinner with
Mr. Sioeng and his son-in-law.\748\
---------------------------------------------------------------------------
\743\ Id. at v. 1, 65.
\744\ Id. at v. 1, 6-7.
\745\ Id. at v. 1, 71-72.
\746\ Id. at v. 19-20; v. 2, 147 (``Steve Kinney was responsible
for my entire fundraising for State Treasurer . . .'').
\747\ Id. at v. 1, 72, 75 Deposition of Steven Kinney, Senate
Committee on Governmental Affairs, 7-8 (Sept. 23, 1997).
\748\ Deposition of Matthew K. Fong, v. 1, 76.
---------------------------------------------------------------------------
According to Mr. Fong, ``shortly after'' the meeting in the
Speaker's office, Mr. Kinney asked for, and received,
permission from Mr. Fong to approach Fong campaign donors and
invite them to events involving the Speaker.\749\ Later that
month, Mr. Fong was contacted by a member of the Sioeng family,
who told him that they had been solicited for contributions by
Steve Kinney on behalf of Speaker Gingrich.\750\ Mr. Fong
indicated that he felt that supporting the Speaker was a good
idea.\751\
---------------------------------------------------------------------------
\749\ Id. at v. 1, 75.
\750\ Id. at v. 1, 77.
\751\ Id. at v. 1, 77.
---------------------------------------------------------------------------
On July 18, 1995, less than one week after the meeting with
Speaker Gingrich, a Sioeng family corporation, Panda
Industries, Inc., made a $50,000 contribution to the National
Policy Forum, a subsidiary of the Republican National
Committee. The day after the contribution, at Mr. Fong's
suggestion, Mr. Sioeng was seated next to the Speaker at an
Asian-American ``outreach event'' held in Beverly Hills,
California.\752\ According to the Chinese language newspaper,
the China Press, the central topic of discussion at the event
was Sino-U.S. relations, and Mr. Sioeng gave the Speaker a
lengthy explanation of his views on U.S. China policy.\753\
Whether Mr. Sioeng had a similar discussion with the Speaker
during their private meeting remains unknown.
---------------------------------------------------------------------------
\752\ State Treasurer Linked to Asian Funds, Records Show, Los
Angeles Times (Feb. 25, 1998).
\753\ China Press (July 22, 1995).
---------------------------------------------------------------------------
Mr. Fong insisted that Mr. Sioeng's attendance at the
Beverly Hills event was ``unrelated'' to fundraising.\754\
Instead, he testified that the invitation was based on a list
of about 20 Asian-American community leaders he provided to the
Speaker's office at their request.\755\
---------------------------------------------------------------------------
\754\ Deposition of Matthew K. Fong, v. 1, 82.
\755\ Id. at v. 1, 82.
---------------------------------------------------------------------------
Mr. Fong acknowledged, however, that his wife Paula
received a 10% commission from the NPF for the Sioeng family's
contribution.\756\ Documents obtained by the Committee show
that Mrs. Fong requested the commission on July 28, 1995, in an
invoice sent to Joe Gaylord at the Republican National
Committee. Mr. Gaylord previously served as one of Speaker
Gingrich's most senior aides.
---------------------------------------------------------------------------
\756\ Id. at v. 1, 89.
---------------------------------------------------------------------------
In December 1995, Speaker Gingrich wrote a letter welcoming
participants to an international badminton tournament organized
by the Sioeng family.\757\ This letter immediately preceded a
$50,000 contribution by a Sioeng family company to the Fong
campaign.\758\
---------------------------------------------------------------------------
\757\ Id. at v. 2, ex. 8.
\758\ Although the Speaker's letter is not dated, Mr. Fong
testified that he helped the Sioeng family obtain welcome letters from
the Speaker and California Governor Pete Wilson prior to the
Contribution. Id. at v. 2, 102.
---------------------------------------------------------------------------
c. Unanswered Questions Regarding Mr. Sioeng's Relationship
With Matt Fong and Speaker Gingrich
Although the Committee took Mr. Fong's deposition, Chairman
Burton refused to pursue the investigation of Mr. Sioeng's
relationship with Mr. Fong and Speaker Gingrich any further. On
March 20, 1998, Rep. Waxman wrote Chairman Burton to request
that information about Mr. Sioeng be obtained from the
Speaker's office, Mr. Kinney, and Mr. Gaylord. Chairman Burton,
however, did not respond to Rep. Waxman's request. Rep. Waxman
also wrote Chairman Burton on June 11, 1998, June 16, 1998, and
August 26, 1998, to request a further investigation into Mr.
Sioeng's ties with Speaker Gingrich. Rep. Waxman wrote: ``To
conduct a fair and impartial investigation into all of Mr.
Sioeng's potentially improper contributions, the Committee must
investigate Mr. Barbour, Mr. Gaylord, Mr. Kinney, and others to
ascertain their first-hand knowledge of Mr. Sioeng and the
nature of the monies they solicited from Mr. Sioeng.'' \759\
Chairman Burton again did not respond to these requests.
---------------------------------------------------------------------------
\759\Letter from Rep. Henry Waxman to Chairman Dan Burton (Aug. 26,
1998).
---------------------------------------------------------------------------
As a result of Chairman Burton's refusal to investigate,
many important questions remain unanswered. For example,
without obtaining information from the Speaker's office and Mr.
Kinney, the Committee cannot determine whether the Speaker knew
of Mr. Sioeng's foreign nationality and his ties to the Chinese
government prior to their meeting in the Speaker's office.
Similarly, without obtaining testimony from Mr. Gaylord, Mr.
Kinney, and members of the Speaker's staff, the Committee
cannot determine if the Speaker or the RNC knew of Mr. Sioeng's
nationality or his ties to the Chinese government when the NPF
accepted the $50,000 contribution from Panda Industries, a
Sioeng family company.
The Committee also cannot determine without further
investigation whether Mr. Fong testified truthfully about his
relationship with Mr. Sioeng. There are several troubling
aspects of Mr. Fong's testimony that merit further
investigation. For example, Mr. Fong testified that he did not
become aware of the $50,000 contribution from one of the Sioeng
family's businesses to the NPF until it was reported in the
press approximately two years after it was made.\760\ This
seems implausible, given that (1) his wife received a $5,000
commission on the contribution, (2) the contribution was
solicited by his chief fundraiser, Steve Kinney, and (3) Mr.
Fong himself was involved in the solicitation of the
contribution.\761\ Without deposing Mr. Kinney, Mrs. Fong, and
others, the Committee cannot assess the credibility of Mr.
Fong's denial.
---------------------------------------------------------------------------
\760\ Deposition of Matthew K. Fong, v. 1, 87; Senate Deposition of
Matthew K. Fong, 49.
\761\ Mr. Fong testified that he gave Mr. Kinney permission to
solicit the Sioeng family for the contribution, and that when contacted
by the Sioeng family, he encouraged them to contribute to the Speaker.
Id. at 75-77.
---------------------------------------------------------------------------
There are also substantial discrepancies in Mr. Fong's
testimony that deserve further investigation. One area of Mr.
Fong's testimony which involves a clear and unambiguous
contradiction is his testimony as to whether he saw a $20,000
contribution check when it was handed to him by Mr. Sioeng. In
his Senate testimony, Mr. Fong denied ever seeing the check,
stating that it was given to him in a sealed envelope which he
gave unopened to his staff.\762\ In his House testimony,
however, Mr. Fong contradicted his Senate testimony and
acknowledged seeing the check.\763\
---------------------------------------------------------------------------
\762\ Senate deposition of Matthew K. Fong, 40 (Sept. 19, 1997).
\763\ Deposition of Matthew K. Fong, v. 1, 61.
---------------------------------------------------------------------------
This changing testimony raises the possibility that Mr.
Fong has testified falsely to conform his testimony to his
legal defense. It is undisputed that Mr. Fong accepted a
contribution from a foreign national. When questioned by Senate
investigators, Mr. Fong asserted that he did not knowingly
accept a contribution from a foreign national because he
thought the contribution came from Mr. Sioeng's son or son-in-
law.\764\ This defense is called into question, however, by the
fact the Mr. Fong personally solicited Mr. Sioeng, not his son
or son-in-law, for the contribution; accepted the contribution
from Mr. Sioeng, not his son or son-in-law; and thanked Mr.
Sioeng, not his son or son-in-law, for the contribution.\765\
Mr. Fong's new House testimony allows him to claim that he saw
an unfamiliar name, Sioeng San Wong, on the check. According to
this version, Mr. Fong can claim that the unfamiliar name led
him to the conclusion that the contribution was not from Mr.
Sioeng personally.
---------------------------------------------------------------------------
\764\ Senate deposition of Matthew K. Fong, 23.
\765\ Senate Minority Report, 5577-5578 (Mar. 10, 1998).
---------------------------------------------------------------------------
Other areas of Mr. Fong's testimony also raise questions
as to the veracity of Mr. Fong's account. In the Senate, Mr.
Fong testified that he informed Mr. Sioeng about restrictions
on foreign contributions in response to Mr. Sioeng's confusion
as to contribution limits in different
jurisdictions.766 Mr. Fong's testimony before the
House on the subject is quite confused. After initially
reiterating his Senate testimony that Mr. Sioeng inquired as to
the differences in contribution limits between different
jurisdictions,767 Mr. Fong later testified that he
shared the rules when Mr. Sioeng raised the possibility of
obtaining contributions from his business partners
overseas.768 When pressed about his inconsistent
testimony, Mr. Fong ultimately admitted that he could not
recall the specifics of the conversation beyond having shared
restrictions on foreign contributions with Mr.
Sioeng.769
---------------------------------------------------------------------------
\766\ Senate deposition of Matthew K. Fong, 34.
\767\ Deposition of Matthew K. Fong, v. 1, 24.
\768\ Id. at v. 1, 24.
\769\ Id. at v. 1, 57.
---------------------------------------------------------------------------
Moreover, Mr. Fong first told House investigators that his
meeting with Mr. Sioeng at which he received the $50,000
contribution was unscheduled;770 then he reversed
himself and stated that he had called ahead to schedule the
appointment.771
---------------------------------------------------------------------------
\770\ Id. at v. 1, 28.
\771\ Id. at v. 1, 49-50.
---------------------------------------------------------------------------
In sum, although the majority refused to thoroughly
investigate the contributions Mr. Fong received from Mr.
Sioeng, the information the Committee did receive raises
serious questions and does not support the majority's premature
conclusion that Mr. Fong did not knowingly accept foreign
contributions from Mr. Sioeng. The record is clear that:
Mr. Fong and Mr. Sioeng had a close personal
relationship and that Mr. Fong was the only elected official to
receive a personal contribution from Mr. Sioeng. In total, the
Sioeng family contributed $102,000 to the Fong campaign over a
15-month period.
Mr. Fong's testimony to House investigators
fundamentally conflicts with his previous Senate deposition. On
basic facts--such as whether he actually saw Mr. Sioeng's check
and the circumstances of his meeting with Mr. Sioeng--Mr. Fong
has given different answers under oath to identical questions.
In light of the inconsistent and implausible aspects of Mr.
Fong's testimony, it is a possibility he has made false
statements under oath. Further investigation is clearly
warranted in this matter.
5. Other Foreign Contributions to Republicans
Additional examples of foreign contributions to
Republicans, including contributions from foreign governments,
have been reported in the press and documented in the Senate
minority report. The majority turned a blind eye to this
conduct, however, and instead focused solely on foreign
contributions to Democratic entities.
Examples of foreign contributions to Republicans which were
largely ignored by the Committee include:
Contributions from Thomas Kramer. On July 18,
1997, German national Thomas Kramer was fined $323,000 by the
FEC for making illegal foreign campaign contributions. This was
the largest fine ever imposed by the FEC on an individual. Mr.
Kramer contributed more than $400,000 to federal, state, and
local campaigns during the 1994 election cycle, including
$205,000 to the Florida Republican party. The Florida
Republicans were fined $82,000 by the FEC for accepting Mr.
Kramer's contribution, but still refuse to return $95,000 of
the contribution.772 Although the Committee held a
hearing on Mr. Kramer's contributions, that hearing focused
almost exclusively on his links to Howard Glicken, a Democratic
fundraiser.773
---------------------------------------------------------------------------
\772\ See, e.g., $323,000 Fine Levied for Foreign Contributions,
Washington Post (July 19, 1997); Sen. Mack Returned Money to German
Businessman Two Years Ago, Gannett News Service (July 18, 1997).
\773\ House Committee on Government Reform and Oversight, Hearing
on Federal Election Commission Enforcement Actions: Foreign Campaign
Contributions and other FECA Violations, 105th Cong., 2d Sess. (Mar.
31, 1998).
---------------------------------------------------------------------------
Contributions from Michael Kojima. Michael Kojima
was called ``America's worst deadbeat dad'' by the Los Angeles
District Attorney's office.774 He contributed
$598,770 to the Republican party during the 1992 election
cycle, including $500,000 to the President's Dinner which
bought him a seat at President Bush's table. The money for one
$100,000 contribution was written on an account that would have
had insufficient funds but for a wire transfer from a foreign
corporation that was received before the check cleared. Mr.
Kojima brought five Japanese businessmen to the dinner. It has
been reported that these businessmen paid Mr. Kojima as much as
$175,000 each to attend the event. In return for Mr. Kojima's
contributions, the RNC arranged for 10 meetings between Mr.
Kojima and U.S. Embassy personnel in Asia, and wrote at least
15 letters on Mr. Kojima's behalf. At the time of the
contribution, Mr. Kojima was almost a million dollars in debt
for failure to pay child support or his business
creditors.775
---------------------------------------------------------------------------
\774\ Funds Not by the (Bank) Book: GOP, New York Daily News (Oct.
15, 1996).
\775\ Senate Minority Report, 5413-5572.
---------------------------------------------------------------------------
Contributions to the Jesse Helms Center. The Jesse
Helms Center, which was established to honor Sen. Helms, house
his archives, and host conservative speakers, solicited at
least $325,000 from foreign governments, including a $225,000
contribution from the government of Taiwan in 1993 and $100,000
from the government of Kuwait following the Persian Gulf war in
1991. The Taiwanese contribution followed a conversation
between Sen. Helms and a high-ranking Taiwanese official. At
the time, Sen. Helms was the ranking minority member of the
Senate Foreign Relations Committee.776 Because the
Center is a charitable foundation, foreign governments can make
contributions that may be prohibited under federal election
law, the donors are not subject to federal contribution limits,
and the donations are not required to be publicly disclosed.
---------------------------------------------------------------------------
\776\ See, e.g. Foundation for Special Interests: Sen. Helms's
Charity Gets Large Gifts From Taiwan, Kuwait, Tobacco, Washington Post
(Oct. 26, 1996).
---------------------------------------------------------------------------
6. Contributions to Republicans from U.S. Subsidiaries of Foreign
Companies
The controversy over fundraising during the 1996 elections
began in September 1996, after newspapers reported that Cheong
Am America, a U.S. subsidiary of a South Korean company,
contributed $250,000 to the DNC. After the discovery of this
and other contributions that were subsequently returned by the
DNC, RNC Chairman Haley Barbour said, ``I'll tell you right
now, you won't find any contribution like this in our
records.'' 777 In fact, during the 1996 election
cycle, the Republican party received far more contributions
($8.4 million) from American subsidiaries of foreign companies
than did the Democratic party ($4.1 million). 778
Some of the largest contributions to Republicans from foreign
corporations include:
---------------------------------------------------------------------------
\777\ Republicans Return Illegal $15,000 Donation from Canadian
Company, Roll Call (Oct. 21, 1996).
\778\ Subsidiaries of Foreign Corporations Big Political Donors,
Associated Press (May 20, 1997).
---------------------------------------------------------------------------
Brown & Williamson Tobacco Corp. Brown and
Williamson Tobacco Corp., a cigarette manufacturer, is the U.S.
subsidiary of British-owned B.A.T. Industries. The company
contributed $1 million during the 1996 election cycle, all but
$83,000 of it to Republicans.779
---------------------------------------------------------------------------
\779\ Id.
---------------------------------------------------------------------------
News Corp. News Corp. is a foreign media
conglomerate owned by Rupert Murdoch. Four subsidiaries of News
Corp. contributed almost $1 million during the 1996 election
cycle, all but $94,000 of it to Republicans.780
---------------------------------------------------------------------------
\780\ Id.
---------------------------------------------------------------------------
Glaxo Wellcome Inc. Glaxo Wellcome is a U.S.
subsidiary of the British pharmaceutical company of the same
name. The company contributed $898,954 in the 1996 elections,
including $772,729 to Republicans.781
---------------------------------------------------------------------------
\781\ Id.
---------------------------------------------------------------------------
C. The Relationship between Access to Republican Leaders and Campaign
Contributions
Political contributions to both the Democratic and
Republican Party have substantially increased access for
wealthy individuals and organizations to government officials.
The practice of providing political contributors special access
skews our democratic process. It means that well-funded special
interests have more opportunity than the average citizen to
make their views known to decision makers and to exert
influence on government operations. It is also clearly a
bipartisan practice.
1. The Sale of Access by Republican Congressional Leaders
In 1997, even as congressional Republicans leveled public
criticism at President Clinton and the Democratic Party
regarding contribution-for-access allegations, the Republican
Party provided big donors with special access to members of
Congress. For example:
In February 1997, the RNC rewarded individuals and
companies that had contributed $175,000 or more over four years
to the RNC with a three-day gathering involving elected
Republican leaders. This event, held at the Breakers Hotel in
Florida, featured briefings and speeches. Policy makers that
attended included Senate Majority Leader Trent Lott, Speaker
Gingrich, and House Appropriations Committee Chairman Bob
Livingston, among others.782
---------------------------------------------------------------------------
\782\ Republican Leaders Entertain Party's Big Donors at Luxurious
Florida Resort, Washington Post (Feb. 21, 1997); GOP's Reward for Top
Donors: 3 Days With Party Leaders, New York Times (Feb. 20, 1997).
---------------------------------------------------------------------------
In April 1997, Senate Republicans offered $5,000
tickets to a ``policy forum'' withMajority Leader Lott and
other Republican colleagues.783
---------------------------------------------------------------------------
\783\ $5,000 Donors Invited to GOP `Forum,' Washington Post (Mar.
12, 1997).
---------------------------------------------------------------------------
In May 1997, the Republican National Committee
promised contributors who donated or raised $250,000 breakfast
and photographs with Speaker Gingrich and Majority Leader Trent
Lott.784
---------------------------------------------------------------------------
\784\ GOP Seeks $250,000 Contributors, St. Louis Post-Disptach
(Apr. 20, 1997).
---------------------------------------------------------------------------
In June 1997, the annual fund-raising dinner of
the National Republican Senatorial Committee and the National
Republican Congressional Committee offered $100,000
contributors a long list of special benefits, including ``a
breakfast with the House Republican leadership; a luncheon with
the Senate GOP leaders; an `afternoon forum' with Senate
Majority Leader Trent Lott . . . and Speaker Newt Gingrich'';
and ``a predinner reception with congressional GOP leaders.''
785
---------------------------------------------------------------------------
\785\ A Hot Meal Ticket, National Journal (May 17, 1997).
---------------------------------------------------------------------------
There are many other examples of Republican members of
Congress providing special attention and access to big
Republican contributors, including some occasions where
congressional buildings were used to solicit campaign
contributions. For example, as discussed in Part I.A.4.c, the
1995 Republican Senate House Dinner invitation promised
contributors direct access to Republican Party leaders in
buildings owned by Congress.786 Speaker Gingrich has
even allegedly sold access to the State of the Union address to
Congress. In January 1991, according to media reports, members
of his political action committee, GOPAC, were invited to drink
champagne in his office in the Capitol as President Bush
delivered the State of the Union address. These GOPAC members
later received a tour of the Capitol.787
---------------------------------------------------------------------------
\786\ Invitation from the Republican members of the United States
Senate and House of Representatives to the 1995 Republican Senate House
Dinner.
\787\ Gingrich Traded Access for Funds--`Pot Calling Kettle Black,'
Atlanta Constitution (March 6, 1997).
---------------------------------------------------------------------------
One of the most blatant access-for-contributions schemes is
the so-called ``season-ticket'' program established by the
Republican Party for donors who contribute at least $250,000.
According to the New York Times, the Republican Party not only
offered these contributors ``the smorgasbord of perks, like
access to the party's private skybox and a photo session with
the Republican nominees'' at the Republican convention, but
also provided them with special ``staff members to help with
problems in Washington.'' 788 A senior executive
whose corporation was a ``season ticket holder'' reportedly
stated that the $250,000 season ticket ``was pitched as an
entree . . . to `the best access to Congress.' ''
789 As the New York Times reported, donors
understood the purpose of the special staff to be ``to arrange
meetings with members of Congress and help them find their way
around Washington.'' 790
---------------------------------------------------------------------------
\788\ $250,000 Buys Donors `Best Access to Congress,' New York
Times (Jan. 27, 1997).
\789\ Id.
\790\ Id.
---------------------------------------------------------------------------
2. The Sale of Access by Prior Republican Administrations
The sale of access to big political donors was also common
in past Republican administrations. As described in the
minority report in the Senate Governmental Affairs Committee's
recent campaign finance investigation, for example, dozens of
meetings, dinners, and receptions were held at the White House
for big Republican donors during the Ford, Reagan, and Bush
administrations.791
---------------------------------------------------------------------------
\791\ Senate Minority Report, 7968-77, 8053-56 (appendix to Chapter
28).
---------------------------------------------------------------------------
One prominent example involves ``Team 100'' members, the
wealthy individuals that donated over $100,000 to help elect
President Bush. Team 100 members consistently received special
attention from the Bush Administration. Common Cause magazine,
which chronicled the substantial access provided to Team 100
members, concluded: ``Team 100 has ensured access and influence
in the executive branch while seeking and obtaining executive-
branch pork barrel hand-outs; vigorous import-export
assistance, high-level intervention on regulatory and other
matters; appointments to ambassadorships and federal advisory
commissions; [and] broad national policies for wealthy Wall
Street, oil, real estate, cable television and other
interests.'' 792
---------------------------------------------------------------------------
\792\ Bush's Ruling Class, Common Cause Magazine (April/May/June
1992).
---------------------------------------------------------------------------
3. Contributions That May Have Influenced Policy Decisions
Selling access for political contributions is unseemly.
Even more disturbing, however, is the fact that special
interests, by virtue of their political contributions, have
been able to influence and sometimes change public policy
decisions. There have been numerous allegations of Republican
policy favors in exchange for political contributions in recent
years.
One of the most serious examples of an alleged quid pro quo
is the $50 billion tax break that Speaker Gingrich and Majority
Leader Lott reportedly included in the 1997 budget deal after
the RNC received $8.8 million in contributions from the tobacco
industry.793 This example is discussed in detail in
Part I.A.4.a.
---------------------------------------------------------------------------
\793\ Donors to Campaigns Fared Well in Budget, Washington Post,
(Aug. 22, 1997); FEC Records.
---------------------------------------------------------------------------
Unfortunately, there are many other examples of the
Republican Congress granting policy favors to big contributors.
For instance, since 1994, Amway Corporation has contributed
over $3 million to Republican committees, including $1.7
million in 1994. Amway founder Richard DeVos and his wife also
gave $1 million to the RNC in April 1997. According to media
reports, these contributions coincided with significant policy
decisions. During congressional consideration of the 1997
budget legislation, Speaker Gingrich worked to secure tax
breaks that some estimated ``could be worth $268 million over
the next several years'' for Amway subsidiaries.794
---------------------------------------------------------------------------
\794\ Clinton to Test Veto Power; Congress Nurtured Special
Interests in Tax, Spending Bills, New Orleans Times-Picayune, (Aug. 7,
1997); FEC Records.
---------------------------------------------------------------------------
Other examples include:
Oil, energy, and natural resources industries
contributed $18.3 million to political parties since the
beginning of the 104th Congress; $9.7 million (73%) to
Republicans. The 1997 budget deal included a provision to
benefit many oil, energy, and natural resources companies by
reducing the amount of alternative minimum tax that these
companies have to pay by 75% or more. The provision is worth an
estimated $18 billion.795
---------------------------------------------------------------------------
\795\ Tilting the Balance, Citizen Action (1997); FEC Records.
---------------------------------------------------------------------------
Texas businessman Harold Simmons and his family
contributed at least $1.5 million to Republican candidates and
committees since 1980. The 1997 budget deal included a
provision that would primarily benefit the sale of sugar beet
processing plants by Mr. Simmons's company. Tax experts
estimated that $60 million of the provision's $84 million tax
benefit would go to his firm. President Clinton exercised the
line-item veto to strike the tax break.796
---------------------------------------------------------------------------
\796\ President to Use New Veto, Washington Post (Aug. 11, 1997);
Tilting the Balance, Citizen Action (1997).
---------------------------------------------------------------------------
Golden Rule Financial Corporation was the top
proponent and beneficiary of Medical Savings Accounts (MSAs) as
an alternative to the current Medicare system. During the 1994
election cycle, Golden Rule contributed $620,775 to Republican
committees, and its chairman and president contributed over
$152,000 to GOPAC. Following these contributions, Speaker
Gingrich supported MSAs as a part of the 1995 Medicare
legislation. MSAs also became a prominent feature of the 1996
Republican platform.797
---------------------------------------------------------------------------
\797\ Congressional Record, H62989 (June 13, 1996); Highlights from
the 1996 Republican Platform, Boston Globe (Aug. 13, 1996); Favored Few
Stand to Gain from Republican Tax Cuts, Washington Post (Dec. 24,
1995); FEC Records.
---------------------------------------------------------------------------
During the Bush Administration, many policy favors to
contributors reportedly were dispensed by the White House
Council on Competitiveness.798 Operating without
public notice or record, under an unwritten ``no appeal'' rule
regarding its decisions, the Council on Competitiveness
reviewed numerous federal rules and regulations. According to
Bob Woodward and David Broder of the Washington Post, Vice
President Quayle and his small council staff changed or
attempted to change federal regulations on a range of matters,
while ``leaving what vice presidential aides call `no
fingerprints' on the results of its interventions.''
799
---------------------------------------------------------------------------
\798\ One of the Council's staff members then was current Rep.
David McIntosh, who is now a member of the House Government Reform and
Oversight Committee.
\799\ Quayle's Quest: Curb Rules, Leave `No Fingerprints,'
Washington Post (Jan. 9, 1992).
---------------------------------------------------------------------------
Major Republican contributors reportedly had tremendous
access to the council. According to the Washington Post, Vice
President Quayle and council staff held ``closed-door
roundtables with business people who [had] made sizable
contributions to the local or national GOP'' during campaign
visits to various cities around the country.800 One
sample six-month period reviewed by the media showed that each
of the 24 petitioners granted a meeting with the Council on
Competitiveness had made significant contributions to the RNC,
the Bush-Quayle campaign, or both.801
---------------------------------------------------------------------------
\800\ Id.
\801\ They Can't Compete, Legal Times (Sept. 7, 1992).
---------------------------------------------------------------------------
The Council on Competitiveness compiled an extensive record
of intervention in federal regulations to benefit major
contributors. An article in the Wall Street Journal in October
1992 was titled Many of Competitiveness Council's Beneficiaries
Are Firms That Make Big Donations to the GOP. The article
described how oil industry interests that had donated hundreds
of thousands of dollars to the Republican Party worked with the
Competitiveness Council to weaken regulations on handling used
motor and lubricating oil.802 The article also
reported that Indiana pharmaceutical company Eli Lilly & Co.
contributed thousands of dollars to the Bush-Quayle campaign
and appeared to have ``an inside track at the council.'' The
article noted that, in 1991, ``the council asked Lilly to
review the council's plan to revamp the Food and Drug
Administration's drug-approval policy--which would greatly
benefit Lilly--before the policy was made public.'' Also in
1991, the council ``asked the EPA to make changes in proposed
air-pollution permit rules that jibed almost exactly with
requests Lilly had previously made of the EPA.'' 803
---------------------------------------------------------------------------
\802\ Many of Competitiveness Council's Beneficiaries Are Firms
That Make Big Donations to the GOP, Wall Street Journal (Oct. 13,
1992).
\803\ Id.
---------------------------------------------------------------------------
Similarly, an article in Time described how the council
intervened with the Environmental Protection Agency to narrow
the definition of ``wetlands,'' thereby ``satisfying a powerful
coalition of farmers and builders and reducing America's
wetlands by as much as 30 million acres.'' The article stated:
``The council is potentially a political gold mine for Quayle,
who often refers businesspeople with complaints about
government meddling to his eager staff of deregulators.''
804
---------------------------------------------------------------------------
\804\ Need Friends in High Places? Time (Nov. 4, 1991).
---------------------------------------------------------------------------
D. Triad Management Services Engaged in Questionable Practices to
Support Republican Candidates
Triad Management Services, Inc., is a corporation formed in
1996 which purportedly provided political consulting advice and
services with the intent of maximizing the effectiveness of
contributions from political conservatives.805 The
minority report in the Senate campaign finance investigation,
as well as numerous media accounts, suggests that, through
Triad, a few wealthy individuals spent millions of dollars to
influence and perhaps even change the outcome of certain 1996
federal elections, without disclosing their identities. The
Senate minority report concluded that this type of secret
effort ``fundamentally undermines the spirit and letter of
current campaign finance laws.'' 806 Triad's
activities were undertaken exclusively to benefit Republicans.
---------------------------------------------------------------------------
\805\ National Journal (Sept. 28, 1996).
\806\ Senate Minority Report, 6290.
---------------------------------------------------------------------------
As discussed in Part I.A.4.e, the minority has repeatedly
requested that the Committee investigate Triad, and the
Chairman has repeatedly promised to do so. At the November 6,
1997, Committee meeting, Rep. Maloney asked Chairman Burton,
``I would like to know when you are going to issue subpoenas to
the groups and individuals involved in the Triad Management
scheme to violate or evade the campaign finance laws?''
Chairman Burton responded, ``We are looking at it. And we very
well may do that.'' 807 At the following hearing,
Rep. Barrett asked Chairman Burton, ``What about the Triad
Management? Are we looking at that, Mr. Chairman?'' Chairman
Burton replied, ``I am going to send a subpoena to Triad. Does
that satisfy you?'' 808 One month later at another
Committee hearing, Rep. Lantos asked FBI Director Louis Freeh
to look into Triad's activities. In response, Chairman Burton
stated, ``There will be, as I said before, an investigation
into the Triad matter.'' 809
---------------------------------------------------------------------------
\807\ House Committee on Government Reform and Oversight, Hearings
on White House Compliance with Committee Subpoenas, 105th Cong., 1st
Sess. 204 (Nov. 7, 1997).
\808\ House Committee on Government Reform and Oversight, Hearings
on Johnny Chung: His Unusual Access to the White House, His Political
Donations and Related Matters, 105th Cong., 1st Sess. 89 (Nov. 13,
1997).
\809\ House Committee on Government Reform and Oversight, Hearings
on The Current Implementation of the Independent Counsel Act, 105th
Cong., 1st Sess., vol. 2, 47, 49 (1998).
---------------------------------------------------------------------------
Nevertheless, despite the Chairman's promises and the
substantial evidence of campaign finance improprieties, the
Committee has not issued one document subpoena or requested any
depositions related to Triad.
At the October 8, 1998 Committee meeting, Chairman Burton
attempted to explain the Committee's lack of action on Triad.
He stated:
The minority in the Senate worked very hard on the
Triad issue. And we received all of the information
after the Thompson Committee concluded its
investigation. And we received the information on
Triad. It was thoroughly investigated by the Senate
Oversight Committee. And they found no illegal
activities. . . . After you raised the issue before
this committee, we did take a thorough look at the
report that the Senate sent over to us, and there was
no need to duplicate their efforts.810
---------------------------------------------------------------------------
\810\ Statement of Chairman Burton, Meeting of the House Committee
on Government Reform and Oversight, unofficial transcript, 64-65 (Oct.
8, 1998).
The Chairman's statement, however, is in conflict with the
facts. The Senate minority report provided substantial evidence
indicating that Triad may have engaged in a range of possibly
improper or illegal activities, including participating in
schemes to evade campaign contribution limits and disclosure
requirements, and coordinating with campaigns on political
advertising. Moreover, Triad, its affiliates, and other
associated persons and entities did not make available to the
Senate the information necessary to resolve the serious
questions surrounding Triad's activities. For example, persons
with important roles in Triad activities, including Triad
president Carolyn Malenick, either refused to be deposed or
appeared but would not answer substantive questions. The Senate
Committee did not issue orders to enforce Triad subpoenas and
did not subpoena a key Triad-related entity.811
---------------------------------------------------------------------------
\811\ Senate Minority Report, 6291-93.
---------------------------------------------------------------------------
Thus, contrary to Chairman Burton's October 8 remarks, the
Senate did not have the opportunity to ``thoroughly
investigate'' Triad, and an investigation of Triad by this
Committeewould not ``duplicate'' the work of the Senate. In
fact, further investigation is absolutely necessary to fill important
gaps that remained when the Senate investigation shut down.
1. Background on Triad
Triad's purported purpose is to advise clients on making
contributions.812 However, evidence indicates that
Triad was focused on influencing congressional races. Senator
Nickles, appearing in a Triad promotional video, described
Triad as follows: ``[T]his is a very effective organization
that is going in and helping us, in those races that are close,
those races that are targeted.'' 813 In that same
video, Ms. Malenick states, ``If we need to move, or have
$100,000 put in a congressional race tomorrow, where are we
going to find it?'' 814 The Senate minority report
concluded that ``Triad exists for the sole purpose of
influencing federal elections.'' 815
---------------------------------------------------------------------------
\812\ National Journal (Sept. 28, 1996).
\813\ See GOP Critic of Clinton Filmed Promo, Arizona Republic
(Nov. 4, 1997).
\814\ See Web of GOP Donors Studied: Senate Looks into
Interconnected Nonprofit Groups That Spent Millions on Election Ads in
1996, Austin-American Statesman (Nov. 2, 1997).
\815\ Senate Minority Report, 6289.
---------------------------------------------------------------------------
Triad and its affiliates were apparently funded primarily
by a few wealthy individuals. The Senate minority report states
that Pennsylvania businessman Robert Cone provided a
substantial amount of Triad's funding, in payments totaling at
least several hundred thousand dollars.816 Triad
also is affiliated with two ``non-profit'' organizations,
Citizens for Reform and Citizens for the Republic Education
Fund,817 which, according to the Senate minority
report, were simply shell companies that have been essentially
run by Triad.818 Two secret trusts, the Personal
Trust and the Economic Education Trust, provided the majority
of the total contributions received by these
groups.819 The Senate minority report suggests that
Mr. Cone funded the Personal Trust, while Charles and David
Koch, brothers who control Koch Industries of Wichita, Kansas,
funded the Economic Education Trust.820
---------------------------------------------------------------------------
\816\ Id. at 6293-94.
\817\ According to the Senate minority report, Citizens for Reform
and Citizens for the Republic Education Fund claimed tax-exempt status
in 1996 under section 501(c)(4) of the tax code, which applies to
groups whose primary activity is not lobbying and campaign activities.
These groups, however, have apparently conceded that they may not have
fit the 501(c)(4) criteria. Senate Minority Report, 6301-02.
\818\ Id.
\819\ Id. at 6309.
\820\ Id. at 6309-10.
---------------------------------------------------------------------------
2. Triad's Alleged Illegal Corporate Contributions
Campaign finance laws prohibit corporations from making
contributions, including providing in-kind services, to
political candidates.821 The Senate minority report
found that Triad may have violated these prohibitions. The
report asserts that ``Triad provided political consulting
services to numerous Republican campaigns free of charge,''
including conducting fundraising and advising campaigns on
strategy and fundraising.822 For example, after his
pre-primary visit with one Republican campaign, a Triad
representative noted: ``In response to their request, I gave
them a plan to work out with regards to fundraising,
establishing specific financial goals and programs to achieve
those objectives.'' 823 Further, on at least two
occasions a Triad employee, Meredith O'Rourke, reportedly
helped then-Senatorial candidate Sam Brownback make fundraising
calls at the NRCC offices.824 Senate investigators
were unable to find evidence that any of the campaigns paid
Triad for these services.825
---------------------------------------------------------------------------
\821\ 2 U.S.C. Sec. 441b.
\822\ Senate Minority Report, 6294-97.
\823\ Id. at 6352-53, document entitled, ``Vince Snowbarger KS03.''
Rep. Snowbarger's chief of staff stated that Mr. Snowbarger also met
with Triad officers after the primary election to discuss fundraising.
James Kuhnhenn, Political Funds for Kansan Examined, Democrats Attack
Role of GOP Consultants in Snowbarger Campaign, Kansas City Star (Oct.
4, 1997).
\824\ Senate Minority Report, 6296.
\825\ Id. at 6294.
---------------------------------------------------------------------------
Triad also may have illegally facilitated fundraising and
advocated the election or defeat of candidates through faxes to
its clients. For example, one fax describes ``Top Tier Races in
Need of Cash'' and asks for checks payable to committees
affiliated with the candidates.826 Another fax
stated that Sheila Frahm, Senator Brownback's primary opponent,
``must be defeated.'' 827 If Triad provided free
consulting services to campaigns and advocated for
candidates,828 Triad would appear to have made
illegal corporate contributions.
---------------------------------------------------------------------------
\826\ Id. at 6296, 6367-68.
\827\ Id. at 6296, 6369-70.
\828\ The Senate minority report also suggests that Triad may have
provided consulting services to the campaigns of Christian Leinbach,
Jim Ryun, Steve Stockman, Mark Sharpe, and Jay Mathis. Id. at 6295-96.
---------------------------------------------------------------------------
3. Triad's Alleged Schemes to Evade Contribution Limits
According to the Senate minority report, evidence suggests
that Triad was involved with schemes to route contributions to
campaigns through PACs from individuals who had contributed the
legal maximum. As part of these schemes, Triad apparently
encouraged campaigns to provide Triad with the names of ``maxed
out donors.'' \829\ A number of individuals may have
participated in schemes with Triad that enabled them to
contribute to candidates to whom they had ``maxed out.''
---------------------------------------------------------------------------
\829\ For example, the Triad memo describing its consultant's visit
to the campaign for Rep. Pete Sessions, who is now a member of the
House Committee on Government Reform and Oversight, notes that the
campaign ``will have a list of their maxed out donors for our
inspection as soon as there is a call from Washington.'' Id. at 6299.
Triad memos for visits to the campaigns of Gary Nodler and Ed Merritt
also note that those campaigns have ``maxed out'' donors. In addition,
the Senate minority report notes that candidates who provided Triad
with the names of potential contributors included Rep. Riley and Rep.
Gutknecht. Id. at 6297-301, 6702, 6727-28.
---------------------------------------------------------------------------
For example, in the 1996 election cycle, Robert Riley, Jr.,
contributed the maximum amount allowed to the campaign of his
father, Rep. Robert Riley.\830\ Between May 9 and May 23, 1996,
the junior Mr. Riley also made separate contributions of $1,000
to four PACs that are on an internal Triad list, and these PACs
soon thereafter made contributions to his father's
campaign.\831\ The younger Mr. Riley told Senate investigators
that he ``made his contributions on the advice of [Triad
president] Malenick.'' \832\ The Senate minority report
discusses numerous other examples involving other individuals.
The campaigns that allegedly may have benefited from
contribution routing schemes include the Steve Stockman
campaign, the Ray Clatworthy campaign, the Brian Babin
campaign, and the campaigns of Rep. J.C. Watts and Senator
Brownback.\833\
---------------------------------------------------------------------------
\830\ Gerald F. Seib and Glenn R. Simpson, Adviser Helps Political
Donors Spread Their Wealth, Wall Street Journal (Apr. 10, 1997).
\831\ Senate Minority Report, 6297.
\832\ Id. at 6298.
\833\ Id. at 6297-301.
---------------------------------------------------------------------------
4. Triad's Possible Improper Coordination on Political Advertisements
At a conference in early 1998, Dick Dresner, a consultant
who worked with Triad in 1996, reportedly described how
individuals can secretly funnel their money into the election
process:
Republican consultant Dick Dresner . . . said some very
wealthy donors, who want to remain completely
anonymous, can establish trusts to distribute their
money anonymously to any number of issue-advocacy
organizations. Consultants for these organizations then
steer this money into very close races, where ``your
money can be pivotal and the election is just two weeks
away.'' Even if the anonymous donor's name emerges once
or twice during the campaign, Dresner said, ``His role
is greatly underestimated.'' \834\
---------------------------------------------------------------------------
\834\ Outside Interest Groups Get Inside Clout With Voters,
Sacramento Bee, (Feb. 3, 1998).
Mr. Dresner's comments appear to describe the approach that
Triad used in funding 1996 political advertisements.
The Senate minority report states that Triad affiliates
Citizens for Reform and Citizens for the Republic Education
Fund spent between $3 and $4 million on advertising in House
and Senate races, including over $1 million on Kansas
races.\835\ As noted above, the Economic Education Trust and
the Personal Trust provided the majority of funding for
Citizens for Reform and Citizens for the Republic Education
Fund. According to the Senate minority report, evidence
indicates that production of at least some of the
advertisements involved Triad or its affiliates, in conjunction
with vendors, including Mr. Dresner, that were retained by the
Economic Education Trust.\836\ The donors behind the trust also
appear to have provided input into the preparation of these
ads. Senate investigators were unable to discern the exact
nature of these arrangements, as Mr. Dresner, Triad attorney
Mark Braden, and Ms. Malenick refused to appear for depositions
or answer substantive questions.\837\ However, based on the
existing evidence, the Senate minority report suggests that
Triad enabled contributors to fund political advertising
without having to disclose their identities.\838\
---------------------------------------------------------------------------
\835\ Senate Minority Report at 6304, 6312. The Kansas races were
the contest that resulted in the election of Sen. Sam Brownback, Rep.
Snowbarger, Rep. Jim Ryun and Rep. Todd Tiahrt.
\836\ Id. at 6309-13.
\837\ Id. at 6311.
\838\ Id. at 6309-13.
---------------------------------------------------------------------------
Evidence also suggests that Triad and its affiliates
collaborated with campaigns in thepreparation of some, if not
all, of the advertisements it funded.\839\ The Senate minority report
asserts that, because of the level of collaboration that occurred and
the content of the ads, ``Triad's advertising expenditures constituted
disguised contributions to the candidates.'' \840\ If this is the case,
then Triad helped contributors support advertisements while evading
contribution limitations and disclosure requirements.
---------------------------------------------------------------------------
\839\ Id. at 6304-06. For example, according to the Senate minority
report, in the race between Bill Yellowtail and Rep. Rick Hill, Triad
sponsored television ads attacking Yellowtail in a way that
corresponded to notes in Triad's report on its visit with the Hill
campaign a few weeks before the ads ran.
\840\ Id. at 6306.
---------------------------------------------------------------------------
Triad's advertising effort in Kansas, in particular,
deserves examination by the Committee, since the Committee has
an ongoing investigation of alleged conduit payments to the
Kansas Democratic Party in 1996. The Senate minority report
states that Triad and its affiliates allegedly spent close to
$1 million on four of the six Kansas federal races in 1996, and
that it is likely a few wealthy individuals funded most if not
all of that effort. According to the Senate minority report,
one of the three House candidates on whom Triad spent money won
by less than 2% of the vote; the others won by less than
5%.\841\ Further, while the Kansas Senate race between Jill
Docking and Sam Brownback was close in October 1996, Senator
Brownback won by a 54% to 43% margin after Triad's last-minute,
$400,000 advertising campaign criticizing Docking.\842\ Thus,
through Triad, a few individuals may have played a significant
role in determining the composition of the Kansas delegation.
---------------------------------------------------------------------------
\841\ Id. at 6312.
\842\ The Secret of a Senator's Success?, Washington Post (Dec. 12,
1997).
---------------------------------------------------------------------------
The Senate investigation did not have the opportunity to
determine definitively the sources of Triad funding and the
nature of interaction between Triad and Republican campaigns.
It also did not have access to statements that Texas
businessman Peter Cloeren made regarding Triad, as discussed
above in Part IV.A. Given the serious possible violations that
may have occurred involving Triad, and the substantial
foundation of evidence already established by the Senate
investigation, the Committee's refusal to pursue these issues
is unjustified. The lack of interest by Committee Republicans
in issues involving Triad underscores the partisan nature of
the Committee's investigation.
V. THE REPUBLICAN CONGRESS HAS BLOCKED CAMPAIGN FINANCE REFORM AND
PLAYED POLITICS WITH THE FEDERAL ELECTION COMMISSION
Our current political landscape is rife with unappealing
campaign finance practices. As these views have demonstrated,
both Democrats and Republicans have pled guilty to making or
arranging illegal conduit contributions. Both Democrats and
Republicans have received questionable foreign contributions.
And both Democrats and Republicans have provided special access
to large contributors in federal buildings.
Unfortunately, many of the most abusive campaign finance
practices may not be covered by existing law. As Rep. Waxman
wrote in an op-ed at the outset of the campaign finance
investigation:
The real scandal is what's legal and common. It is
especially important that we stop the explosive growth
of soft money and that we shed light on the new
strategies the parties use to get around campaign-
finance laws, such as having nonprofit groups finance
clearly partisan activities. Our goal should be to
understand how the process functions at every step, to
expose its flaws and to get rid of the loopholes. This
approach may not be popular in Congress, but leaders of
both parties must realize that the situation has to
change.\843\
---------------------------------------------------------------------------
\843\ Rep. Henry A. Waxman, Campaign Reform Made Whole, New York
Times (Feb. 28, 1997).
One dramatic illustration of the deficiencies in existing
law is the recent decision of the United States District Court
for the District of Columbia on the legality of foreign ``soft
money'' contributions. The court determined that, under current
campaign finance laws, it is legal for a foreign national to
contribute ``soft money'' to a political party.\844\ ``Soft
money'' includes donations for generic party-building
activities, get-out-the-vote activities, and issue advocacy
ads, among other activities. Ironically, the district court
decision means that most of the allegedly foreign contributions
to Democrats that the majority has spent millions investigating
may not even be illegal, even if they were contributed by
foreign nationals.
---------------------------------------------------------------------------
\844\ United States v. Trie, Crim. No. 98-00291, Slip. Op. (D.D.C.
Oct. 9, 1998), 7-10.
---------------------------------------------------------------------------
In fact, soft money donations are completely exempt from
almost all of the provisions of federal election law. As the
court stated, ``it could not be more apparent that . . .
Congress intended the proscriptions of the Federal Election
Campaign Act to apply only to `hard money' contributions.''
845 Thus, for example, FECA's limitation on the size
of campaign contributions and its prohibition on corporate
contributions do not apply to soft money
contributions.846 More than any other factor, it is
this exemption for soft money that has tainted our campaign
finance system. As the Washington Post has editorialized,
``[t]he fundraising excesses of the last campaign almost all
had to do with soft money.'' 847
---------------------------------------------------------------------------
\845\ Id.
\846\ With respect to contributions to candidates for federal
office and to political committees seeking to influence elections at
the federal level, FECA imposes the following limits: $1,000 per
election to a candidate for federal office; $20,000 per calendar year
to a national committee of a political party; $5,000 per calendar year
to any other political committee; and $25,000 aggregate limit per
calendar year for all federal candidates and committees. 2 U.S.C.
Sec. Sec. 431, 441a(a). While FECA does not impose a cap on
contributions to political parties for other purposes--known as ``soft
money''--these donations may nevertheless end up indirectly influencing
Federal elections.
\847\ Back to Campaign Finance, Washington Post (July 27, 1998).
---------------------------------------------------------------------------
Regrettably, despite the Committee's investment of two
years and over $7 million of taxpayer resources in the campaign
finance investigation, the Committee failed to even hold one
hearing on soft money or the other evident loopholes in our
campaign finance laws, and did not propose even minimal
legislation correcting the obvious deficiencies in the current
law. Moreover, most Republicans on the Committee voted against
meaningful campaign finance reform legislation. They also voted
against an effort to strengthen the Federal Election
Commission, the entity charged with enforcing campaign finance
laws.
a. the republican leadership defeated campaign finance reform
legislation
At the same time that the Committee was spending millions
of taxpayer dollars to focus attention on alleged campaign
finance abuses, Republican leaders in Congress worked
vigorously to prevent passage of campaign finance reform. The
majority of Republican members on this Committee joined their
Republican leaders in this effort to defeat reform.
Unfortunately, the effort succeeded on September 10, 1998,
when, through a procedural vote, the Senate destroyed any
remaining chance of passing reform legislation.848
---------------------------------------------------------------------------
\848\ Congressional Quarterly Weekly, Senate Vote 264, 2429 (Sept.
12, 1998).
---------------------------------------------------------------------------
1. The Campaign Finance Reform Legislation
The two major comprehensive campaign finance reform bills
introduced in this Congress were H.R. 3526, the House
legislation known as the ``Shays-Meehan'' bill, and S. 25, the
Senate legislation known as the ``McCain-Feingold''
bill.849 One of the main components of both of these
bills was a measure to ensure that soft money contributions
were subject to FECA restrictions.850 A third
leading bill, crafted by House freshmen, was introduced by
Reps. Thomas Allen and Asa Hutchinson.851 The Allen-
Hutchinson bill would restrict soft money and increase
disclosure requirements for candidates and groups that run
issue advertisements, among other provisions. Passage of soft
money restrictions, and the other reform measures contained in
these bills, should have been a top priority of this Congress.
---------------------------------------------------------------------------
\849\ The most recent version of the McCain-Feingold bill was
Senate Amendment 3554 to S. 2237 (reprinted in the Sept. 8, 1998
Congressional Record). The Shays-Meehan bill was introduced as H.R.
493, but ultimately was considered as a substitute to H.R. 2183.
Therefore, references in this report to provisions of the Shays-Meehan
bill will cite to H.R. 2183.
\850\ H.R. 2183, Sec. 101; Senate Amendment 3554 to S. 2237, Sec.
101.
\851\ H.R. 2183.
---------------------------------------------------------------------------
2. Republican Efforts to Thwart Campaign Finance Reform
Consideration of campaign finance reform legislation began
in the Senate. Supporters of the McCain-Feingold bill first
attempted to pass the legislation in the Senate in September
and October 1997. After these efforts were rebuffed by Majority
Leader Trent Lott, supporters of the McCain-Feingold measure
reached an agreement with Senator Lott that the legislation
would be brought up by March 6, 1998.852 In late
February 1998, the Senate took up the bill again. However, a
filibuster spearheaded by the Republican leadership, ended
consideration of the matter, after a 51-48 vote on February 26
fell shy of the 60 votes required to end debate.853
---------------------------------------------------------------------------
\852\ Joseph E. Cantor, Campaign Financing, Congressional Research
Service Issue Brief No. 87020 (Updated Sept. 10, 1998) (hereafter the
``Congressional Research Service Issue Brief No. 87020'').
\853\ Id.; Campaign Reform Likely Dead in This Congress, New York
Times (Feb. 27, 1998); Campaign Finance Bill Dies in Senate, Washington
Post (Feb. 27, 1998).
---------------------------------------------------------------------------
The Senate vote demonstrated that the majority of the
Senate favored comprehensive reform. As a result, the actions
of the Senate Republican leadership to stop consideration of
the legislation received widespread criticism. For example, the
Washington Post commented:
The defeat of campaign finance reform in the Senate . .
. was a failure of the legislative process. . . . The
defeat in the Senate . . . was not the process at its
best but a charade in which the Republicans sought to
kill the bill but escape the blame.854
---------------------------------------------------------------------------
\854\ The Wit But Not the Will, Washington Post (Mar. 1, 1998).
The House proceeded on a slower track. Speaker Newt
Gingrich stated on November 13, 1997, that he hoped ``to have a
fair, bipartisan process for voting'' on campaign finance
legislation and that House GOP leaders were ``committed to
having a vote some time in March.'' 855 However, on
March 26, the Republican leadership postponed floor action on
campaign finance legislation. Republicans reportedly were
``concerned they might lose control on the House floor,'' and
would not be able to gain support for Republican-sponsored
legislative alternatives to the Shays-Meehan
proposal.856 House Majority Leader Dick Armey
stated, ``If our guys won't commit to us on the procedural
votes, we're not putting it (the bill) on the floor.''
857
---------------------------------------------------------------------------
\855\ House GOP May Try to Tackle Reform One Bill at a Time,
CongressDaily (Nov. 13, 1997).
\856\ House Republicans Postpone Campaign Finance Debate,
Associated Press (Mar. 26, 1998).
\857\ Id.
---------------------------------------------------------------------------
Instead of considering the Shays-Meehan legislation, the
Republican leadership scheduled floor action on March 30 for
alternative legislation under a procedure known as ``suspension
of the rules.'' 858 This procedure is not commonly
used for consideration of controversial measures, as it does
not allow for amendments, and it requires two-thirds of a
majority for passage of legislation. The vote on the
alternative legislation fell far short of the two-thirds
majority.859 This scheduling scheme, however,
enabled the Republican leadership to prevent serious discussion
of meaningful campaign finance reform while giving the
appearance of considering campaign finance legislation.
---------------------------------------------------------------------------
\858\ Congressional Research Service Brief No. 87020.
\859\ Id.
---------------------------------------------------------------------------
The March actions by the House Republican leadership drew
sharp public criticism. For example, the Washington Post
stated:
The House Republican leaders have followed the
unfortunate example of their Senate counterparts on
campaign finance reform, only even more clumsily. Their
goal was to kill the bill but avoid the blame. . . .
Republicans have spent a year and a half claiming to be
indignant about the fund-raising abuses in the last
campaign, which were considerable, and on the part of
both parties. But given the chance to change the law to
ban the principal abuse, having to do with the raising
and spending of so-called soft money, they flinch. . .
. The tactic has been to offer up mock reform bills
that they could be pretty sure (a) wouldn't pass, in
part because they were written to be offensive to
Democrats, and (b) wouldn't achieve reform if they did
pass.860
---------------------------------------------------------------------------
\860\ Hypocrisy on Campaign Funds, Washington Post (Apr. 1, 1998).
Despite the March setback, House supporters of
comprehensive campaign finance legislation pressed forward by
circulating a ``discharge petition'' to force the House
Republican leadership to take up the legislation on the House
floor. Such a petition needs the signatures of 218 House
members--the majority of the House. By April 22, the petition
had garnered 204 members, including 12 Republicans, and Speaker
Gingrich agreed to allow debate on campaign finance reform in
May.861
---------------------------------------------------------------------------
\861\ Veterans, Freshmen Shook Campaign Finance Reform Loose for
House Vote, Washington Post (Apr. 25, 1998); Gingrich Agrees to Open
Debate on Campaign Money, Atlanta Journal (Apr. 23, 1998).
---------------------------------------------------------------------------
The discharge petition indicated that a clear majority of
the House was likely to support meaningful campaign finance
reform. As a result, when the Republican leadership took up the
campaign finance legislation in May, the leadership attempted
to structure the debate in a manner that would frustrate
efforts to pass effective legislation. The Republican
leadership allowed debate on comprehensive campaign finance
legislation, but at the same time made in order 11 substitutes,
a constitutional amendment, and 258 other amendments, and
allowed for consideration of additional amendments on the
floor, a schedule that promised extended and complicated
consideration of the matter.862 The Los Angeles
Times described the Republican leadership's maneuvering as
follows:
---------------------------------------------------------------------------
\862\ Congressional Research Service Issue Brief No. 87020.
Speaker Newt Gingrich and Majority Leader Dick Armey,
the Republican chieftains who tried to bury campaign
finance reform earlier this year, are at it again. Last
week they outlined a cynical plan to deny what the
clear majority of House members want: serious
consideration of a reform bill sponsored by Reps.
Christopher Shays (R-Conn.) and Martin T. Meehan (D-
Mass.), the only viable reform legislation before the
House at this time. . . . Gingrich and Armey have
deviated from the usual House rules to allow debate on
unlimited amendments being tacked onto the bill in a
blatant attempt to sow confusion among legislators.
Incredibly, House Republican leaders all but admit to
the subterfuge. Armey, for instance, says he wants
campaign reform ``out of my life by July 4th,'' and
Rep. Ray LaHood (R-Ill.) said of his party's strategy:
``We tried squelching it first. Now we're trying to
talk it to death.'' 863
---------------------------------------------------------------------------
\863\ Dirty Ploy on Campaign Reform, Los Angeles Times (June 9,
1998).
The effort to kill campaign finance reform through endless
debate persisted throughout the summer. In late July 1998, the
Washington Post described the delaying tactics of the House
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leadership as follows:
The House is scheduled this week to resume the bizarre
debate in which the leadership for two months has tried
and failed to kill campaign finance reform, only to
come back a week later and try again. . . . It is long
past time to allow the vote the leadership has sought
to prevent. Majority Leader Richard Armey says he will
allow it--next week, after the Senate is safely out of
town for the August recess. Then House leaders will
only have to stall the bill another month until
adjournment. They can stall anything for a month.
That's the plan.864
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\864\ Back to Campaign Finance, Washington Post (July 27, 1998).
A final vote on the Shays-Meehan bill did not occur until
August 6, 1998. The bill passed by a strong majority, 252-
179.865 All but 15 of the 205 Democrats that voted
supported the legislation, while the vast majority of
Republicans (164 out of 225) voted against the bill.
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\865\ House Votes, Congressional Quarterly Weekly, 2206 (Aug. 8,
1998).
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At this point, however, there was little time left in the
session to achieve Senate passage necessary for enactment of
the bill. On September 10, hope for comprehensive campaign
finance reform legislation in the 105th Congress ended, when
the Senate failed to overcome procedural blocks to considering
comprehensive campaign finance reform
legislation.866 On this vote, all 45 Democratic
Senators voted to end the leadership's filibuster. Because they
were joined by only 7 Republican Senators, campaign finance
reform did not receive the 60 votes needed to proceed with
consideration of the legislation.867
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\866\ Congressional Quarterly Weekly, Senate Vote 264, 2429 (Sept.
12, 1998).
\867\ Id.
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Commentator David Broder succinctly summarized the
Republican leadership conduct on the reform legislation:
It was the adamant opposition of the Republican
congressional leadership that ultimately stalled
campaign finance legislation. Tactics employed by
Speaker Newt Gingrich delayed passage of any bill on
that side of the Capitol until there were fewer than
four workweeks left in this session. That made it easy
for a Republican filibuster to stymie action in the
Senate.868
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\868\ David Broder, Renew Efforts on Campaign Finance Reform, Star-
Ledger Newark, NJ (Sept. 30, 1998).
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3. How Committee Members Voted
All of the Democrats and the one Independent on the
Committee voted for the Shays-Meehan legislation in the House.
However, even after two years of rhetoric by Committee
Republicans about campaign finance abuses, only seven of the 24
Committee Republicans voted in favor of the bill. Those who
voted against campaign finance reform were Chairman Burton and
Reps. Hastert, Cox, Ros-Lehtinen, Mica, Davis, McIntosh,
Souder, Scarborough, Shadegg, Sununu, Sessions, Pappas,
Snowbarger, Barr, Miller, and Lewis. Republicans voting for the
measure were Reps. Shays, Gilman, Morella, McHugh, Horn,
LaTourette, and Sanford.869
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\869\ House Votes, Congressional Quarterly Weekly, 2206 (Aug. 8,
1998).
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The purpose of congressional investigations should be to
illuminate where reforms in government policies are needed. The
Committee's investigation and investigative reporting by the
media have amply demonstrated the need for far-reaching
campaign finance reform. Sadly, the votes against campaign
finance reform by most of the Republican members of the
Committee is another demonstration that the goal of the
Committee's campaign finance investigation has been to
embarrass Democrats--not to improve our campaign financing
system.
b. the republican leadership sought to hamstring the fec
In the face of criticism for their opposition to campaign
finance reform, Republican leaders such as Speaker Gingrich
have claimed ``the problem is lawbreakers, not the campaign
finance law.'' 870 Yet, despite their professed
outrage at ``lawbreakers,'' Republican leaders have not sought
to strengthen FEC enforcement of campaign finance laws. To the
contrary, the Republican leadership has sought to hamstring the
FEC through removal of the agency's chief law enforcement
official and through inadequate funding.
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\870\ Gingrich Assails Democrats for ``Illegitimate'' Campaign,
Atlanta Journal (Sept. 28, 1997). See also Democrats and Clinton, in
Surprise Move, Curb Contributions, Vow to Refuse Aliens' Donations,
Wall Street Journal (Jan. 22, 1997) (quoting spokesperson for House
Majority Leader Richard Armey as stating that campaign finance abuses
``don't require changing the law'').
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1. Efforts to Remove the FEC's General Counsel
Republican leaders have worked to pass legislation that
would effectively remove FEC general counsel Lawrence Noble
from his job. According to media accounts, Mr. Noble is opposed
by Republicans because he has encouraged the investigation of
Republican fundraising groups that include GOPAC (a political
action committee formerly affiliated with Newt Gingrich), the
Christian Coalition, and the weekly meeting of business leaders
known as the ``Thursday Group'' that is hosted by House
Republican conference chairman John Boehner.871 He
also reportedly has antagonized Republicans by defending FEC
efforts to impose restrictions on the use of soft money in
national campaigns.872
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\871\ See, e.g., Panel Votes Term Limits for Top FEC Staffers, The
Hill (Sept. 30, 1998); Campaign Reformer Under Attack, New York Times
(Sept. 17, 1998); Noble's Cause, The New Republic (July 20/27, 1998);
The FEC v. the GOP, National Journal, Inc. (July 11, 1998).
\872\ See, e.g., Editorial, Campaign Reformer Under Attack, New
York Times (Sept. 17, 1998); The FEC v. the GOP, National Journal (July
11, 1998).
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The FEC is comprised of three Republican and three
Democratic commissioners. Under current law, the FEC staff
director and general counsel can only be removed if four of the
six commissioners approve removal. Republican leaders, however,
introduced legislation that would limit the terms of the FEC
staff director and general counsel to four years unless at
least four of the six FEC commissioners vote to reappoint
them.873 Under the scheme set forth by the
legislation, three commissioners could band together on party
lines to force the ouster of a general counsel or staff
director who took actions that were unappealing to one party or
the other.
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\873\ See, e.g., H.R. 3748; Senate Amendment No. 3379.
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In the House, the legislation was proposed by House
Oversight Committee Chairman Bill Thomas.874 The
House Appropriations Committee Republicans, led by Chairman Bob
Livingston, added this provision to the Treasury-Postal
appropriations bill in June on a party-line vote.875
The language was removed, however, during House floor
consideration of the bill in July on a point of order raised by
Rep. Carolyn Maloney on the grounds that this language
inappropriately legislated in a general appropriations
bill.876
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\874\ H.R. 3748; Punishing Competence at the F.E.C., New York Times
(June 11, 1998).
\875\ The FEC v. the GOP, National Journal (July 11, 1998); GOP
Targets Election Commission's Staff, Wall Street Journal (June 12,
1998).
\876\ Congressional Record, H5675 (July 16, 1998).
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In the Senate, the legislation was spearheaded by Sen.
McConnell, head of the National Republican Senatorial
Committee. The Senate considered the measure in July as an
amendment to S. 2312, the Treasury-Postal appropriations
legislation. The Senate voted on party lines against tabling
the amendment, but the bill and amendments were set aside until
after the August recess.877 In September, when the
Senate again took up Treasury-Postal appropriations
legislation, Sen. McConnell dropped much of the controversial
language from the amendment, and the bill passed.878
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\877\ Action on Treasury-Postal Bill Is Suddenly Halted after
Dispute over Term Limits at FEC, Congressional Quarterly Weekly, 2111
(Aug. 1, 1998); Congressional Quarterly Weekly, Senate Vote 246, 2122
(Aug. 1, 1998).
\878\ Senate Passes Treasury-Postal Bill after GOP Postpones Debate
on Term Limits for FEC Staff, Congressional Quarterly, 2345 (Sept. 5,
1998).
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Despite the rejection of the FEC legislation in both the
House and Senate versions of the Treasury-Postal appropriations
bill, Republicans in the House-Senate conference on the bill
revived the FEC legislation on a party-line vote.879
When the measure was brought to the floor in early October, the
House once again voted to block the provision, this time by
preventing the bill's consideration through a procedural
vote.880
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\879\ GOP Passes Contentious Bill, Associated Press (Sept. 29,
1998).
\880\ Congressional Quarterly Weekly, House Vote 475, 2690 (Oct. 3,
1998).
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Proponents of the measure to limit the general counsel's
term have denied that the FEC legislation targets Mr. Noble.
However, GOP sources have acknowledged that they are ``hoping
to send a serious message'' to the FEC.881 One
Republican source reportedly stated ``It's not targeted at
someone they dislike, but at an enforcement program they don't
like that has been fairly aggressive with important
constituencies of the leadership.'' 882
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\881\ FEC Counsel Tries to Prevent His Ouster, Roll Call (Oct. 1,
1998).
\882\ Id.
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Although the professed goal of the Republican leadership is
to strengthen FEC enforcement, the repeated attempts to remove
Mr. Noble are designed to have the opposite effect. As the New
York Times wrote in an editorial, ``At a time when Congress
should be moving aggressively to strengthen the Federal
Election Commission's ability to enforce the nation's campaign
finance laws, House Republicans are racing headlong in the
opposite direction. . . . The [measure] is nothing more than an
attempt to install a do-nothing enforcement staff.''
883
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\883\ Punishing Competence at the F.E.C., New York Times (June 11,
1998). See also, Housing Lawrence Noble, New York Times (Oct. 2, 1998);
A Law-and-Order Issue, Washington Post (Sept. 28, 1998); Micro-
Muzzling, Roll Call (June 11, 1996).
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2. Efforts to Defund the FEC
In addition to efforts to remove the FEC general counsel,
the Republican leadership also has opposed providing the FEC
with the financial resources the FEC has requested over the
past few years. For example, the FEC asked for $6.6 million in
additional funds for FY 1997 and 1998 to hire staff for the
heavy caseload resulting from the 1996 election, but
congressional appropriators refused this request.884
Appropriators provided a funding increase to the FEC for FY
1998, but required that the majority of this amount go toward
computer modernization, instead of staffing
needs.885 Rep. Robert Livingston, chairman of the
House Appropriations Committee, explained his position on
funding the FEC as follows: ``I see no reason to increase their
revenue. . . . I think they have become a political
organization, they perpetuate their own base, and they don't do
the job they were intended to do. I just don't believe in these
guys.'' 886
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\884\ Money Woes Leave FEC Watchdog with More Bark Than Bite,
Congressional Quarterly Weekly, 469-70 (Feb. 28, 1998).
\885\ Id.
\886\ Id.
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During consideration of the fiscal year 1999 appropriations
legislation that funded the FEC, House appropriators again did
not provide the full amount requested by the FEC. When the
funding measure reached the full House, however, $2.8 million
was added to the FEC funds through an amendment sponsored by
Reps. Carolyn Maloney and Vince Snowbarger. Only 27 of 223
Republican members that voted supported this amendment, while
186 of 200 Democratic members that voted supported this
amendment.887
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\887\ Congressional Quarterly Weekly, House Vote 287, 1970 (July
18, 1998).
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Unfortunately, the vast majority of the Committee
Republicans did not support providing the funding requested by
the FEC. Only seven of the 24 Republicans on the Committee
voted for the amendment to the Treasury-Postal appropriations
bill that provided the FEC with an additional $2.8 million. All
of the Democrats and the one Independent on the Committee voted
in favor of the amendment.888 It is an ultimate
irony that at the same time that Committee Republicans have
spent millions of dollars investigating alleged Democratic
campaign finance abuses, they refuse to provide proper support
to the very agency that is charged with enforcing our campaign
finance laws and preventing further abuses.
Henry A. Waxman.
Tom Lantos.
Robert E. Wise, Jr.
Major R. Owens.
Edolphus Towns.
Paul E. Kanjorski.
Gary A. Condit.
Bernard Sanders.
Carolyn B. Maloney.
Eleanor Holmes Norton.
Chaka Fattah.
Elijah E. Cummings.
Dennis J. Kucinich.
Rod R. Blagojevich.
Danny K. Davis.
Thomas H. Allen.
Harold E. Ford, Jr.
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\888\ Congressional Record, Final Vote Results for Roll Call 287
(July 16, 1998).
ADDITIONAL VIEWS OF HON. THOMAS M. BARRETT
I agree with chapters I, IV, and V of the minority views.
Thomas M. Barrett.