The Buying of the President 2000
The Democratic Party
Donald Fowler, the national chairman of the Democratic National Committee, was summoned to the family quarters of the White House on September 10, 1995, for a 9 p.m. meeting with President Bill Clinton, Vice President Albert Gore, Jr., White House Chief of Staff Leon Panetta, and Deputy Chief of Staff Harold Ickes, among others.
Fowler had become the chairman of the DNC the previous January, not long after the Democrats’ shellacking in the 1994 mid-term elections. While leading his party, Fowler — in the backdoor tradition of half the political party chairmen since 1977 — was simultaneously working as a registered lobbyist for various corporate interests. One of his biggest clients: Chem-Nuclear Systems, Inc., a nuclear-waste disposal company that he’s represented in his native South Carolina and in Illinois. “1 started representing them in December 1979,” Fowler told the Center for Public Integrity. “I was just about ready to leave the state [Democratic Party] chair’s job here [in South Carolina]. I’ve been on their dole since then.”
Chem-Nuclear’s investment in Fowler and other lobbyists (about $350,000 in all, including generous campaign contributions to South Carolina lawmakers) paid off big in 1995, when the state legislature agreed to open the company’s nuclear-waste landfill in Barnwell to the entire nation for up to 10 years. The deal was “spun” by the company’s lobbyists as a boost for education, inasmuch as the nuclear-waste disposal fees paid by Chem-Nuclear to the state were to be earmarked for scholarships and school construction. Fowler acknowledged in the interview that the low-level radioactive waste business is “controversial” and also admitted, referring to his lobbying activities while chairman, that he was “surprised that more of that didn’t come up in the various hearings and depositions.” He said, “My private business concerns never became an issue while I was there, and really haven’t since.”
That night at the White House, however, Fowler wasn’t being called on the carpet for his mercenary moonlighting. Indeed, his activities as a lobbyist were known and accepted. ("Party chairs,” he told the Center, “have historically done that.") No, tonight Fowler was being asked to go along with an unprecedented scheme to route tens of millions of dollars in private “soft money” contributions through the Democratic Party for use in a nationwide TV advertising blitz on behalf of the president. Federal law forbids using party funds in this manner for a presidential election campaign, and before 1996, no incumbent president had ever pushed the envelope so near to — or past — the legal limits.
Such a desperate measure reflected Clinton’s precarious political situation. Beset by scandal almost from the moment he’d taken the oath of office, Clinton had seen his chief legislative initiative, health-care reform, die in 1994. And in November of that year, the Democrats had lost eight seats in the Senate and 52 seats in the House of Representatives, giving the Republicans control of Congress for the first time in 40 years.
Clinton, then, was beginning to look like a one-term president. He secretly turned to political consultant Dick Morris, an old ally and political lifesaver from his Arkansas gubernatorial days. In March 1995, Morris recommended a $40 million paid-media campaign that would hit 43 percent of the U.S. population, to begin as soon as possible. Clinton and his advisers toyed with the idea of forgoing federal matching funds and the strict spending limits that come with them, but they ultimately rejected that option as impractical politically. It was also clear, however, that the presidential campaign spending limits precluded an aggressive paid media campaign on behalf of Clinton a full year before the election. Both Morris and Ickes, to this day, remain proud of their solution to the problem: to use soft-money funds routed through the Democratic Party to pay for “issue advertising,” thus circumventing federal election laws. That way, the president’s image could be refurbished without drawing down his campaign war chest for 1996.
No one at the White House meeting that night questioned the idea of bending the law in this way for political advantage. Hand-wringing over issues of ethics, in fact, has not exactly been a hallmark of the Clinton administration, to put it charitably. Moreover, the participants had been advised that the ploy was legal. All the president and his White House team needed now was Fowler’s expected acquiescence, since the Democratic Party would be the pretext and the conduit for the money scheme. He didn’t disappoint them. As Fowler later testified in his Senate deposition, the advertising “was to be funded by the party, but it would focus on the president’s program for the party and what he had done. . . . There was a general consensus that this was a good idea.”
Weeks later, at a fundraising dinner at the posh Hay-Adams Hotel in Washington, Clinton proudly described the scheme. “We realized that we could run these ads through the Democratic Party, which meant that we could raise money in 20 and 50 and hundred-thousand-dollar lots, and we didn’t have to do it all in thousand-dollar [lots],” he said. “And run down — you know — what I can spend, which is limited by law. So that’s what we’ve done.”
Many of the excesses of the 1996 presidential campaign, we now know, were directly related to this conscious decision by the president, the vice president, their White House and campaign aides, and the Democratic Party to subvert the nation’s existing campaign-finance laws. The only way to raise such huge sums of cash, everyone knew, would be for the president and vice president to get personally involved in fundraising, even by making cold calls from within the White House itself. The garish images of unabashedly selling access to the icons of our democracy persist today, of systematically rewarding large donors with invitations to White House coffees, overnight stays in the Lincoln Bedroom and at Camp David, flights on Air Force One, and so on.
Never have we seen such a dubious array of characters plying our nation’s leaders with campaign cash — from an Arkansas restaurateur and an Indonesian billionaire to Buddhist nuns, Chinese arms merchants, and a convicted Colombian drug dealer. All of it distracted us, of course, from the hundreds of millions of dollars invested by powerful economic interests every year in the Washington decision-making process. It’s not that other presidents haven’t sold access to their most generous “backers in the past; they just haven’t done it so systematically, so shamelessly. In retrospect, it was destined to become a national scandal — resulting in congressional investigations, hundreds of hours of hearings, tens of thousands of news stories, and an assortment of little-fish types (19 individuals, at most recent count) charged with violating federal campaign-finance laws. And the president’s first instinct, when the scandal initially hit the public consciousness, was to disingenuously fob it off on the Democratic Party, a distinction without a difference. “That was the other campaign that had problems with that, not mine.”
Presidents have always been the de facto leaders of their respective political parties, and not surprisingly, their White House and political-campaign staffs have exerted substantial influence over the operation and management of the parties. But in 1996 there was such a blurring of responsibility and authority between the Clinton White House, the Clinton-Gore campaign, and the Democratic Party as to make them all practically indistinguishable from each other.
The same company that handled the Clinton-Gore campaign’s TV commercials, for example, produced the DNC-sponsored “issue ads.” The White House’s mammoth database of contacts, built and maintained with millions of dollars in public funds, was meshed with the DNC’s donor database. The DNC’s Robert “Bobby” Watson was given that sensitive assignment; an internal White House memorandum revealed that Clinton and Ickes personally wanted it done. Watson, who had pleaded guilty in 1992 to distributing an illegally intercepted telephone call of Virginia Governor Doug Wilder — became the DNC’s deputy executive director in 1994; its executive director in 1995, under Fowler; and by 1996 he had left and joined a Washington lobbying firm.
As Morris testified, President Clinton was the “day-to-day operational director” of the DNC-sponsored media campaign. He “worked over every script, watched each ad, ordered changes in every visual presentation, and decided which ads would run when and where.” Clinton also was deeply involved in operations and personnel at the DNC, insisting, for example, that a man named John Huang be hired to help raise money. (More than $2 million of the money he helped to raise came from illegal or questionable sources and eventually had to be returned; Huang himself is now a convicted felon.) The president had approved the appointment of Fowler as the DNC’s chairman. He had also approved Marvin Rosen, a Miami lawyer, to be the DNC’s finance chairman in 1995. Federal regulators had accused Rosen of unethical practices that contributed to the failure of a Florida savings-and-loan institution that he had represented and helped to finance. In 1992 his law firm agreed to pay $8.15 million to the Resolution Trust Corporation, the agency that oversaw the S&L bailout.
Apparently no one found it odd that a registered lobbyist for a nuclear-waste dumping company, a convicted political dirty-trickster, and a key figure in an S&L scandal were running the National Democratic Committee as chairman, executive director, and treasurer, respectively. Perhaps that is some kind of metaphor for Washington today.
Soon after Rosen began collecting campaign cash for Clinton and the DNC, he capitalized on his new status and opened a lobbying office in Washington for his law firm. Among those he hired there were Commerce Secretary Ronald Brown’s son Michael and Senator Edward Kennedy’s wife Victoria, according to The New York Times. Some major party donors began to retain Rosen’s firm to do their lobbying in Washington, including controversial oil financier Roger Tamraz, who gave $300,000 to the Democratic Party. He had been ordered by a French court to pay more than $50 million for diverting funds from a French bank that collapsed, and he faced a Lebanese arrest warrant for allegedly embezzling $154 million to $200 million from a bank in that country. Even though he was an international fugitive, Tamraz was invited to six social events with President Clinton, and he spoke directly with the president about his oil pipeline project in the Caucasus, for which he sought U.S. support. He also attended a dinner with the vice president at the home of Senator Kennedy. “The only reason to give money is to get access,” Tamraz, with brazen candor, later told members of the Senate Governmental Affairs Committee. “I think next time I’ll give $600,000.”
Tamraz had Rosen and Fowler — two of the Democratic Party’s top officials — in his pocket. There is detailed evidence that Fowler contacted officials of the CIA and the National Security Council in his efforts to “clear Tamraz’s name,” contacts later described by the investigating Senate committee as ”highly inappropriate.” Unfortunately, such intervention on behalf of a donor was no aberration.
The DNC, for example, attempted to influence a decision by the Interior Department’s Bureau of Indian Affairs regarding a group of Wisconsin Indian tribes that were seeking to open a casino in Hudson, Wisconsin. Neighboring tribes in Minnesota, worried about the competition, opposed the proposal. The application was eventually denied, even though career B1A officials at the regional and national levels had recommended that it be approved. It was a victory for the wealthier Minnesota tribes, which within months gave more than $330,000 to national and state Democratic Party organizations and hired a former DNC treasurer to be their Washington lobbyist. Representatives of these Minnesota tribes had met with Fowler, who subsequently called Ickes and an official of the Interior Department. “Whatever they contributed or didn’t contribute had nothing to do with my actions in that regard,” Fowler later told members of the Senate Governmental Affairs Committee. “We are happy to receive contributions that are made honestly and with integrity, and I assumed that those contributions were made in that vein.” Interior Secretary Bruce Babbitt gave conflicting testimony to Congress about the affair, and an independent counsel found that there was insufficient evidence to warrant charges against either Ickes or him. The Senate committee’s conclusion: “Political donations to the DNC apparently succeeded in purchasing government policy concessions.”
It was widely understood in 1996 that both the Clinton-Gore campaign and the Democratic Party were, for all intents and purposes, being run from the White House. Thus, the most significant decisions about soliciting campaign funds, spending that money, and responding to the policy concerns of big donors all ultimately intersected at 1600 Pennsylvania Avenue. Ickes put it this way in his deposition for the Senate committee: “The president ... is the CEO of the party. If the president says this is the way I want it, it was up to me to see that it was done, and the [DNC] chairman understood that.” Indeed, this was so excruciatingly obvious to Fowler that not once did he protest or appeal an Ickes decision to Clinton himself. Not surprisingly, however, Fowler resented how Ickes had usurped his authority as chairman. “I did feel that he was involved in the management of the DNC in a fashion that I didn’t appreciate, that I didn’t agree with.”
Despite that friction, there certainly was unanimous consent that to succeed at the polls, the nation’s oldest political party would have to accumulate astounding sums of money. And it happened. Various Democratic Party committees raised $345 million, up 61 percent from $214 million in the 1992 presidential election cycle. The amount of large “soft money” contributions to the party tripled. They couldn’t have done it without the president’s active involvement: In 1996 alone, Clinton attended more than 230 fundraising events around the nation, which generated at least $119 million in contributions. “I haven’t slept in three days,” Morris recalled Clinton complaining. “I cannot think, I cannot do anything. Every minute of my time is spent at these fundraisers.” Vice President Gore, similarly engaged, reportedly came to be called the “Solicitor-in-Chief” within the DNC.
The Democratic Party accepted so many contributions of questionable origin that it ultimately was forced to return at least $2.8 million in illegal or improper donations. This epitomizes the now inexplicable: that in the headlong dash for cash, the Democratic Party’s internal vetting process had been quietly eliminated somewhere along the way. After months of hearings and thousands of pages of depositions, it is still unclear how or why that happened.
And so, Americans watched their political process sink to new levels of crassness and absurdity. Who can forget the case of Johnny Chung, a Taiwanese businessman who, along with his company, made $366,000 in contributions to the Democratic Party from 1994 to 1996? The money was later returned, and Chung was subsequently convicted of bank fraud, tax evasion, and conspiracy. Chung had been inside the Clinton White House at least 49 times. “The White House is like a subway,” he explained to a reporter for the Los Angeles Times. “You have to put in coins to open the gates.”
Fowler and his staff at the DNC personally helped Chung slot his token. Fowler met with Chung and a group of business executives from China, and later he personally intervened to make sure that Chung and his foreign guests could attend the president’s Saturday radio address at the White House. That day Shi-Zeng Chen, the founder and president of Tangshan Haomen Group, China’s second-largest beer producer, was pleased to have his picture taken with President Clinton — a photograph later used to advertise beer in China.
Who knows how many Johnny Chungs were given red-carpet treatment by Fowler and his DNC staff, people and favors that we know nothing about? And, inasmuch as the Freedom of Information Act doesn’t apply to White House records, who knows how many lobbyists and CEOs sat down with the president privately, more subtly working the “subway” system, out of public view?
In his prepared Senate testimony, Fowler became the first national political party chairman to unabashedly acknowledge, in broad daylight, what he and other party officials do to “service” donors. “I have long believed, that one of the principal functions of a political party is to provide a link between the people and government,” he said. “I thus believe it fully appropriate for the head of a national party to secure a meeting for a supporter with an administration official and to advocate a worthy cause. Members of Congress do this, staff members of Congress do this. It is your responsibility, their responsibility, it is appropriate for the head of a national political party to do it.”
Stepping past the horse manure, covered as it may be with the shiny gold straw of Washington-speak, the fact is that party officials help pretty much anyone with a big enough political bankroll. Every cause is worthy, so long as the cash rolls in. How else to explain the helping hands for international fugitives or Chinese beer distributors? Fowler was a facilitator between politician and patron, an enabler helping politicians to keep drinking in the cash and helping their patrons feel good about giving it. Party chairmen are by definition the best-connected lobbyists in Washington, and their lobbying is done on behalf of the party’s most generous donors (though none of that activity must be disclosed to the public, under the current laws). So much for the quaint, civics-class notion that political parties exist almost entirely to elect candidates.
Both parties have, increasingly, bent the nation’s campaign-finance laws to their own ends. In the 1995-96 election cycle, for example, they displayed remarkable gumption in using nonprofit, ostensibly nonpartisan organizations to do their political bidding. There was the strange story of Warren Meddoff, who caused President Clinton to do a double take at a fund-raising event in Miami. Meddoff — later described by journalist Elizabeth Drew as “a pudgy man wearing a diamond pinky ring” — gave Clinton his business card, on which he had written, “I have an associate that is interested in donating $5 million to your campaign.” Meddoff told the Senate committee that the president of the United States “took two steps, looked at it, came back, and asked if he could have another one of those cards.” Days later, from Air Force One, Harold Ickes telephoned Meddoff, who informed him that the donation needed to be made “in a tax-favorable way.” Ickes subsequently had his assistant at the White House fax Meddoff a list of four Democrat-friendly tax-exempt groups — complete with the bank-account numbers needed for the wire transfers that Ickes sought.
The Senate Governmental Affairs Committee subpoenaed records of no fewer than 32 nonprofit organizations in an effort to determine if they “were genuinely nonpartisan and acted independently of political parties or candidates, as required by federal law” in the 1996 election cycle. Most of the organizations simply ignored the subpoenas, refusing to produce any documents or witnesses. Apparently no organization was more obstinately unresponsive than the AFL-CIO, which the committee’s investigators found had coordinated its political activities with both the DNC and the Clinton-Gore campaign.
For decades, labor unions have been a major political presence in Washington, contributing generously to the Democratic Party and its candidates. The AFL-CIO and its member unions have gotten more aggressive under the new leadership of its president, John Sweeney. According to the Center for Responsive Politics, in the 1995-96 election cycle, labor unions spent at least $119 million on federal political activity — nearly $66 million in contributions to political candidates and committees, $35 million on issue ads, and $18.5 million on lobbying at the federal level. But labor has never been truly competitive with business, which outspent it seven to one in 1995-96. Then, in 1996, the AFL-CIO dramatically announced that it would spend $35 million to defeat Republican candidates in 75 targeted congressional districts. It planned, as part of that effort, to train and deploy as many as 300 full-time organizers. In many ways, union members remain, as they have traditionally been, the foot soldiers of the Democratic Party.
In the 1970s the Democrat-controlled Congress exempted labor unions from limits on “in-kind, contributions” to political candidates. Consequently, from telephone banks to the daily use of paid union employees, there are virtually no limits and hardly any disclosure. Leo Troy, a professor of economics at Rutgers University, has estimated that the unions provide $300 million to $500 million in such “in-kind” contributions in presidential election cycles, a statistic Republicans “quickly point to” when they are asked about their substantial financial edge in national elections. In his last months in office, President George Bush issued an executive order that required greater disclosure. But it was promptly voided by President Clinton.
Nonetheless, the actual reported contributions shouldn’t be underestimated. Labor unions contributed at least $58.8 million to the two major political parties and to federal candidates and committees in 1995-96 — 93 percent of it to Democrats — and spent at least an additional $6.8 million on independent expenditures and communications costs, according to the Center for Responsive Politics. The most interesting part of the equation, however, is labor’s soft-money giving, which jumped 124 percent from the 1992 to the 1996 election cycles.
Throughout the 1990s, in fact, unions have been among the largest providers of soft money to the Democratic Party. In our “Top Fifty Patrons” list of soft-money contributors to the party from 1991 through June 1999, six of the top ten are labor unions: the American Federation of State, County, and Municipal Employees (AFSCME) was the No. 1 donor, at $3.7 million; the Communications Workers of America (CWA) was No. 2, at $3.6 million; the National Education Association (NEA) was No. 4, at $2.6 million; the American Federation of Teachers (AFT) was No. 5 at $2.1 million; the Service Employees International Union (SE1U) was No. 6, at $2 million; and the United Food and Commercial Workers (UFCW) was No. 9, at $1.8 million.*
*In the interest of full disclosure, it should be noted that The Center for Public Integrity accepted contributions from labor unions (and corporations) from 1990 to 1995, totaling $224,500, or 8 percent of its total income during that period.
Interestingly, the NEA and the AFT — together representing 3.2 million public school teachers and administrators and college and university professors nationwide — have considered merging over the years. If their totals were combined, it means that school teachers nationwide have given the Democratic Party more soft money — more than $7 million in all — than anyone else.
The meshing of Democratic Party, Clinton Administration, and labor union gears has been quite apparent the past seven years. Clinton was never labor’s favorite Democrat — the AFL-CIO Executive Council did not endorse him for president until after he’d secured the party nomination. He confirmed labor’s worst fears, on the issue of international trade, with his administration’s aggressive push for the North American Free Trade Agreement (NAFTA). But union leaders were heartened that he supported one of their favorite issues, national health-care insurance, and they embraced and fought for his proposed plan. By 1995, Clinton, Capitol Hill Democrats, and the unions all especially needed each other after the GOP’s stunning takeover of Congress. Facing hostile and newly empowered forces in both chambers of Congress, Clinton pledged to veto any attempts to repeal the Davis-Bacon Act, which sets wage rates on federal construction projects, to name one of several very real possibilities feared by the unions.
In the summer of 1996, Congress passed and the president signed into law a bill boosting the minimum wage from $4.25 to $5.15 an hour. The only way Clinton and the unions could get the legislation passed was by bundling it with $21 billion in tax breaks for corporate America, essentially buying off such low-wage employers as pizza chains and convenience-store operators, and by labeling it the Small Business Job Protection Act of 1996. As AFL-CIO President John Sweeney complained to us two years ago, “It wasn’t even called a minimum-wage bill.”
But that kind of frustrating, back-door progress, from labor’s perspective, is necessary these days. Members of labor unions make up only 14 percent of the workforce, and despite all the campaign contributions and an occasional victory on the public-relations front, this actually is one of the low points in the history of the U.S. labor movement. A few unions have practically more retirees drawing pensions than actual dues-paying members. And yet a visit to some of the cavernous Washington buildings that serve as the headquarters of many of the largest unions does make one wonder, as writer Jonathan Tasini has, if union officials do not have an “edifice complex.” He calculated the real estate values of union-owned buildings in Washington, D.C., at more than $300 million. And he has written that unions further squandered their resources not on organizing new members but on political contributions at the national level — roughly $250 million from 1979 to 1992.
Some of these buildings seem eerily empty and strangely quiet. As labor lawyer Thomas Geoghegan writes in his poignant book, Which Side Are You On?, organized labor is “too old, too arthritic, to be a cause. It was a cause, back in the thirties. Now it is a dumb, stupid mastodon of a thing, crawling off to Bal Harbour to die. I still read in the press about ‘Labor’ and ‘Business’ on Capitol Hill, fighting over policy, and I think, Labor? What are they talking about? . . . Labor cannot even organize the people who want to join.”
Meanwhile, the international union presidents are very well-paid, very well-fed, and very well-traveled, with multimillion-dollar annual conventions and meetings in Hawaii and other exotic venues. Robert Georgine, for example, draws one salary as the president of the AFL-CIO Building and Construction Trades Department and another as the chairman and chief executive officer of Union Labor Life Insurance Company, a 1,400-employee health and life insurance company with more than $400 million in annual revenues. Georgine isn’t the only union president to fly on a private jet.
The Clinton Administration got NAFTA passed into law, accelerated the privatization of public-sector jobs as part of its “reinventing government” initiatives, and overhauled the nation’s welfare system — all of which, ironically, represented labor’s worst Republican nightmares and have contributed to the loss of thousands of union jobs. Nonetheless, to the unions, Clinton and the Democratic Party are regarded as infinitely better and friendlier than the alternative. Clinton certainly understands the political reality that unions have nowhere else to go. And, drawing on his remarkable political skills, he has quieted their occasional anger and public criticism with the ego-gratifying accouterments of presidential power and high social status in Washington. Thus, union presidents fly with him on Air Force One and attend various White House functions, from the infamous “coffees” to state dinners and Rose Garden ceremonies. That and access to power throughout the executive branch, which for the most part they did not have through 12 cold years of the Reagan and Bush administrations, are tangible benefits to unions of their alliance with Clinton and the Democratic Party.
But that, unfortunately, isn’t the worst of it. The White House and the Democratic Party have coddled and collaborated politically with union leaders who are well known to be corrupt. And Clinton and his party have given the impression to the millions of rank-and-file union members nationwide that greed and corruption at the highest levels of the labor movement are no big deal, and are thus acceptable. Indeed, the Center was unable to find a single utterance by President Clinton or Vice President Gore about the vexing problem of union corruption. In an odd way, the White House, the Democratic Party, and the labor unions have all effectively silenced each other. The president and his party have sought and received hundreds of millions of dollars in political contributions and electioneering from the unions, and are not about to bite the hands that are feeding them. And the unions have sought and received access to power and been able to obtain some policy and even tangible financial gains, and are not about to crow too loudly when the New Democrats enact another pro-business law that’s detrimental to rank-and-file union members.
Take the case of Arthur Coia, the president of the 750,000-member Laborers’ International Union of North America, which since 1991 has given at least $1.2 million in soft money to the Democratic Party. Coia, who earned more than $420,000 in 1998, was found by his own union to have had “a direct conflict of interest” by jointly owning a Ferrari with a car-leasing company that did business with the union. It fined him $100,000 for engaging in an improper business investment with a union vendor. The Justice Department has had a criminal investigation of Coia and his union for years, and in 1994 it determined that Coia has “associated with and been controlled by” mobsters. In 1995, however, the Justice Department decided to allow the Laborers to attempt to regulate themselves. A group of former federal prosecutors and FBI agents hired by the Laborers has removed roughly 200 union members and officials and taken control of 20 local and district councils. But, as part of this same process, a union hearing officer also decided that Coia was not under the control of organized crime and thus could stay in his position.
Meanwhile, Coia has dramatically increased his political clout in Washington. Besides his union’s huge contributions to the Democratic Party, Coia cohosted a 1994 fundraising event that raked in more than $3.5 million for the DNC, and he was vice chairman of a May 1996 bash that produced more than $12 million for the Party. Not only has Coia been a frequent guest at the White House, but he’s also traveled on Air Force One with Clinton several times, including his trip to Denver to greet the Pope. In 1994, First Lady Hillary Rodham Clinton addressed a Laborers’ union conference in Florida, ignoring the Justice Department’s recommendation that she refrain because of the government’s ongoing criminal investigations.
Partisan critics and a few dissident union members have decried all of this, not surprisingly, alleging that Coia and his cronies would have been prosecuted were it not for their close relationship with Clinton and the Democratic Party. The conservative, decidedly anti-union Heritage Foundation actually has documented that in the first two years of the Clinton administration, the financially desperate Laborers’ union received nearly $30 million in grants from several federal departments and agencies, including the Department of Housing and Urban Development and the Environmental Protection Agency. And according to an account in The Washington Monthly, Coia personally lobbied Clinton for federal grants at a fall 1994 meeting in the Oval Office; Clinton told Coia that Harold Ickes, his deputy chief of staff, would personally handle it. (Before joining the White House staff, Ickes, a labor lawyer, represented, among others, the Laborers’ union.)
Then there is the matter of the 245,000-member Hotel Employees and Restaurant Employees International Union, with decades of well-known corruption and associations with organized crime. Its president, Edward Hanley, ruled the union for 25 years, until his forced retirement in July 1998. The union provided Hanley with a luxury condominium in Georgetown, which he used infrequently since he was never in the Washington headquarters more than 25 days a year. The union leased office space in Chicago and Palm Springs, California, not far from homes owned by Hanley. The only employee in the latter office was Hanley’s mother-in-law, who told investigators that “she would like to be productive.” Hanley had a $2.5 million Sabreliner private jet, sometimes used to fly Mrs. Hanley, traveling alone, between Chicago and Palm Springs. The union also maintained a fleet of 60 leased vehicles, in addition to limousines owned in Washington and Chicago. Hanley, a native of Chicago, had more than 100 well-paid organizers and consultants on his union’s payroll, from Jesse Jackson, Jr. (before he was elected to Congress), and former Senator Alan Dixon of Illinois to former House Ways and Means Committee chairman Dan Rostenkowski. Rostenkowski’s $150,000 consulting agreement was apparently signed after his indictment by a federal grand jury and was terminated only after he was convicted.
Perhaps Hanley’s most stunning indulgence, however, was the $450,000 in union funds that went to building the Edward T. Hanley Basketball Arena outside Dublin, Ireland. In 1993 Hanley led a 34-member delegation of union officials and guests, including his wife, to the dedication of the arena with all expenses paid, of course, by the union.
“This [case] was an eye-opener to me,” Kurt Muellenberg, the union’s court-appointed monitor, told the Center. (Muellenberg has more than 20 years experience as a Justice Department prosecutor of organized crime and union corruption in Cleveland, Detroit, and Washington.) “Union leadership at all levels was hardly ever challenged. And the level of corruption and in-your-face arrogance are startling.” As for Hanley, with whom he had several conversations, “there was never any sense of contrition,” Muellenberg said. Indeed, in his formal immunity agreement with the Justice Department, Hanley did not admit any wrongdoing, and the investigative report was sealed until after his forced retirement. He will not be prosecuted.
Like other unions in the AFL-CIO, Hanky’s contributed heavily to Democratic Party and Clinton campaigns.
Of course, no union in the United States is considered to have a more notoriously corrupt history than the International Brotherhood of Teamsters. Six of the past eight presidents of the Teamsters union, from Jimmy Hoffa to Ron Carey, were indicted, convicted, or sued by the federal government while in office for such offenses as pension-fund looting and racketeering. In 1989, as part of a consent decree, the union was placed under the control of the Justice Department. But even that did not prevent the fraudulent reelection of Ron Carey in 1996. The onetime “reform” leader was expelled from the Teamsters after three of his top campaign officials pleaded guilty to several felonies for siphoning money from the union’s general fund. Nor did federal “oversight” prevent the looting of what was once the nation’s largest most powerful union. During Carey’s tenure, its treasury plummeted from $154 million to $16 million. From 1991 to 1996, as the union was careening toward bankruptcy, it was spending more than $18 million on a wide range of political activities and borrowing nearly $16 million to help pay for its activism.
Carey’s point man at the White House was Ickes, who forwarded a memo to Clinton about the political importance of the Teamsters union and highlighted for his attention language in it that urged Clinton “to develop a better relationship with Carey,” which he did. Congressional hearings and reports by two committees have shown at least one way in which Ickes attempted to help Carey. The Teamsters were in the midst of a seemingly interminable strike against Diamond Walnut Growers, Inc., in Stockton, California. Ickes got U.S. Trade Representative Michael “Mickey” Kantor to call William Cuff, the president and chief executive officer of the cooperative, and say that the strike “was interfering with international trade issues.” When Ickes stated in his Senate deposition that the Clinton administration did “nothing that I know of” to help the Teamsters in the Diamond Walnut Growers strike, it became the subject of a preliminary investigation by Attorney General Janet Reno for possible perjury. An independent counsel was not appointed.
By 1996 there had been much mutual back-scratching among the Teamsters, the White House, and the Democratic Party. And so a deal was struck, a complicated scheme that happens to have been illegal. The Teamsters would continue to pour unprecedented sums into the Clinton-Gore campaign and Democratic Party committees, and in exchange the Democrats would help to finance Carey’s own reelection campaign. They couldn’t do that directly, of course, so the money was laundered through a liberal public-interest organization, Citizen Action, and through other groups, including the National Council of Senior Citizens and Project Vote. Federal law prohibits employers from contributing to any union election. More than $4 million in DNC money moved to Citizen Action and other groups, and at least $885,000 in union funds was illegally diverted into Carey’s reelection campaign.
Today, the carnage from this scandal and the continuing federal criminal grand-jury investigation casts a pall over the entire labor movement. Three individuals have pleaded guilty to embezzlement, mail fraud, and conspiracy and have been cooperating with the federal prosecutors. (One of them, Michael Ansara, still does major consulting business with the DNC via his company, the Share Group.) A fourth, William Hamilton, a former political director of the Teamsters union, has been indicted. The AFL-CIO’s No. 2 official, Richard Trumka, who as secretary-treasurer signed some of the checks, has asserted his Fifth Amendment right against self-incrimination — to federal prosecutors, to a court-appointed labor investigator, to a congressional committee, and even to AFL-CIO president Sweeney.
It’s difficult for many labor insiders to accept that Trumka hatched such a plan. No one seems to know for sure how the high-level labor conversations exactly went with respect to the illegal scheme involving the Democratic Party and the Teamsters, but Gerald McEntee, the president AFSCME and the chairman of the AFL-CIO’s political committee (a position he assumed in 1995), certainly was involved. He has had a close personal friendship with Carey. McEntee retained an attorney, paid for by AFSCME, to represent him in the Teamsters matter and admitted to federal prosecutors that he sought a campaign donation of $20,000 to the Carey campaign from the owners of a company that does major business with AFSCME. Kelly Press, Inc. is barred by federal law from contributing to a union campaign, and McEntee apparently broke government-imposed rules for union elections by soliciting an AFSCME supplier. Paul Booth, an aide to McEntee who’s married to Heather Booth, a former DNC official and a founder of Citizen Action, also has said under oath that he raised thousands of dollars for Carey.
“What we did, according to our attorneys, was nothing illegal,” McEntee told the Center. “We cooperated fully and completely with the people who were investigating this case, and that’s about the size of it,” said Booth.
But there is, as they say, much more to the story.
McEntee has been the president of the nation’s largest union of public employees since 1981, following the death of Jerry Wurf. Wurf, who boosted the union’s membership from 200,000 to roughly one million — organizing police officers, firefighters, sanitation and hospital workers, and other government employees from coast to coast — was enormously respected for his honesty and his independence. A case in point: He opposed the U.S. involvement in the Vietnam War, to the consternation of George Meany, then the president of the AFL-CIO. Under Wurf, AFSCME became known as a pioneer in aggressively recruiting women and blacks. It is a forgotten footnote of history that the mostly black, striking garbage workers who in April 1968 drew the Reverend Martin Luther King, Jr., to Memphis, where he was assassinated, were AFSCME members. (The day before he was shot, King gave an inspiring speech on the significance of the AFSCME strike in the centuries-long struggle for freedom and civil rights. King’s closing words, including the famous “I’ve been to the mountaintop,” seemed to have eerily predicted his tragic death.)
In McEntee’s two decades of stewardship, AFSCME’s membership has grown only modestly, and no one seems to know the exact number (the union’s annual reports to the Labor Department have suspiciously listed the same membership figure for the past five years: 1.3 million). As in many unions today, secrecy continues to reign. It is not well-known that the progressive union respected for its commitment to civil rights and diversity — it once brought Nelson Mandela to speak to its national convention — was sued by 10 employees for race discrimination. AFSCME settled all the cases out of court. “McEntee was made aware of the situation and he did not take steps to deal with it,” a union insider told the Center. “If you set a permissive environment, if people get a sense that discrimination doesn’t matter, then it will reverberate throughout the organization.”
Long considered one of the “clean” unions, a cloud of corruption has now begun to surround AFSCME. Besides the Teamsters scandal that’s swirling around McEntee and Booth, in recent years no fewer than six AFSCME international vice presidents have been forced to resign. Consider the following:
In New York City, Stanley Hill, the executive director of AFSCME District Council 37, retired after spending several months on unpaid leave pending investigation. Two of his top aides resigned following their admissions that they had helped to rig the vote on the local’s 1996 contract ratification. Also in New York City, Albert Diop was removed last year as the president of an AFSCME clerical workers local. Diop and three others charged more than $1 million in personal expenses on their union credit cards and spent nearly $1.2 million on undocumented “hospitality” payments when traveling. Diop spent more than $600,000 to rent a penthouse apartment and ran up $162,431 in hotel charges in New York City for 446 nights, including 128 on weekends, even though he has a residence in the city. He also spent nearly $135,000 over three years to lease a Lincoln Town Car even though he already had a $665-a-month automobile allowance. In Connecticut, Dominic Badolato was expelled from AFSCME for using illegal strong-arm tactics against his political opponents. In Boston, Joseph Bonavita had to leave his union after an audit revealed he had been paid $82,416 in unauthorized bonuses and undocumented reimbursements. In Iowa, Don McKee was convicted of helping himself to $43,000 in union money. And in Pennsylvania, Earl Stout was convicted of racketeering, embezzlement, and mail fraud.
“Wherever we have found this [corruption], we have rooted it out, and we have either suspended or dismissed the union leaders that were involved,” McEntee told the Center. “We are a good union, we are a clean union.”
When Wurf died, he was making about $108,000 a year in salary and allowances and had refused a raise. Eighteen years later, McEntee makes $375,000 a year, and he also got his friendly board to adopt a deferred compensation plan so that when he retires he will receive nearly 100 percent of his salary. “I think you ought to get decent pay, a decent pension, decent benefits,” McEntee told the Center.
AFSCME also provides McEntee with a car and a chauffeur as well as a $1,800-a-month automobile expense allowance. Sources told the Center that McEntee spends more than $100,000 a year in AFSCME funds to travel around the United States on charter jets and stay in the finest hotel suites, and he is a fixture at such “power lunch” expense-account restaurants in Washington as The Palm, where his caricature is on the wall. None of this information, of course, is in AFSCME’s annual reports to the Labor Department.
Referring to McEntee and, in general, the unseemly extravagances of today’s union leaders, a veteran AFSCME member who asked that his name not be used told the Center, “They think they’re becoming the captains of industry, for chrissakes! . . . I guess they forgot what they’re supposed to be doing.”
The Center has learned that McEntee personally benefited from the generosity of certain AFSCME vendors, a violation of union rules. Consider the case of Kelly Press, which contributed $20,000 to the Teamster election at McEntee’s urging. Over the years, the company has gotten millions of dollars in printing business from AFSCME. McEntee and Paul Kelly, a co-owner of the company, frequently play tennis at Congressional Country Club, in Bethesda, Maryland, where Kelly is a member, and sources told the Center that McEntee has been an occasional guest on the Kellys’ fishing boat. The relationship goes back at least a decade. When McEntee was remarried, Kelly arranged for the wedding reception to be at Congressional. “The only way that you can have a wedding there is that a member has to sponsor you,” McEntee told the Center. “So the Kellys sponsored us.”
No union president is closer to Bill Clinton today than McEntee; the two men have assiduously courted each other for nearly a decade now. AFSCME was the first national union to back Clinton, even before the 1992 New Hampshire primary, when he was still a dark horse. Clinton had spoken to the AFSCME board, and he brought along a letter of support from 840 AFSCME members in Arkansas. He even showed them his own AFSCME membership card. Days later, McEntee assigned three staff members to work for Clinton in New Hampshire. And so it began.
Since 1993, McEntee has reveled in his personal access to the president. From the private St. Patrick’s Day party at the White House and various Rose Garden events, to trips on Air Force One and Friday night bull sessions at the White House mess, McEntee, to quote a veteran union insider, “got lost in space over that stuff.” ("I’ve only been on Air Force One maybe six times — that’s six times in eight years — so it’s not like I take a trip every three weeks,” McEntee told the Center.) At McEntee’s 60th birthday celebration a few years ago at Washington’s Capital Hilton hotel, Clinton spoke warmly about how McEntee had always been there for him. McEntee and AFSCME have certainly been there financially for Clinton and his party, more than anyone else in America, to the tune of more than $3.6 million. The union has an elaborate get-out-the-vote operation, a voter registration effort, and an extensive phone bank system, in addition to the contributions to politicians at all levels of government. McEntee led the AFL-CIO’s highly publicized $35 million ad campaign in 1996. And McEntee, the Center has learned, called a meeting to personally urge higher-ups at AFSCME to make contributions to the president’s legal expense fund.
Unfortunately, such access comes at a steep price. On policy issues of greatest concern to AFSCME’s members, in public McEntee has been largely silent. McEntee doesn’t criticize Clinton by name, and if he feels obligated politically to criticize the administration, which is rare, he has sometimes called the White House in advance to explain it and quietly warn Clinton and his staff. Take, for example, the subject of national health-care insurance. For years AFSCME had advocated the liberal “single-payer” plan with the greatest government role — not surprising for a union whose largest contingent is 325,000 health and hospital workers. But under the Clinton-McEntee spell, the union muted its public advocacy for this policy and fell in line behind the White House. As the Center described in its 1994 study, Well-Healed: Inside Lobbying for Health Care Reform, just weeks before Clinton’s inauguration in January 1993, there was a high-level, unusual confrontation at AFSCME headquarters between Ralph Nader and McEntee.
Nader invoked the example of Franklin Roosevelt, after he had been elected president, telling his supporters, “You elected me, now go out there and make me do it.” Nader argued that advocates of a single-payer approach could not squander the opportunity and had a moral obligation to speak out forcefully. McEntee, by contrast, stressed the extraordinary access they all now had after 12 years of being completely shut out. The basic response was, “We’re going to handle this our way, behind the scenes.”
AFSCME chose not to wage a postcard campaign, or to support a very public bus caravan to Little Rock, Arkansas, to promote the single-payer option. And in early 1993, at a meeting of the AFL-CIO health care committee, McEntee and AFSCME voted in favor of managed competition, abandoning its long-held single-payer position. AFSCME also poured money into television issue ads in support of the Clinton health care plan — ads that were intended to counter the highly effective “Harry and Louise” commercials paid for by the insurance companies. In addition, the Center has learned that when the president and the first lady embarked on a bus tour “to the heartland” to garner public support for the administration’s ill-fated plan, McEntee’s union agreed to help pay for it.
The bottom line, however, is that during the 1993-94 struggle over health-care reform, organized labor, including AFSCME, was politically ineffective and ultimately unsuccessful. McEntee remains unbowed about his inside approach, however. In the spring of 1996, he met with Clinton, urging that the White House address the public concern over managed health care, and months later the president named McEntee to a commission on health care quality.
The “reinventing government” mantra of the Clinton-Gore administration has presented McEntee with an interesting problem, as AFSCME faces initiatives nationwide to privatize many traditional state and local government functions — which, on its face, is a direct affront to the union’s membership. McEntee’s public posture is to support the idea of making government more efficient and responsive by eliminating red tape and redundant management, and to decry privatization when it cheats citizens by failing to provide adequate services by trained employees. AFSCME forged an innovative privatization agreement with the Republican mayor of Indianapolis, Stephen Goldsmith, in which the local union avoided mass layoffs. McEntee has testified before Congress that AFSCME regularly wins back 80 percent of privatized contracts, by bidding successfully or working with management to redesign the system in lieu of privatization.
McEntee was not directly critical of the president when he proposed welfare reform, which union leaders have estimated could cost more than 200,000 jobs, and got it enacted. But he and other union leaders successfully lobbied the administration — over Republican opposition on Capitol Hill — to rule that people who must work for their welfare benefits are protected by federal labor law and entitled to the minimum wage.
McEntee and others were able to gain another back-door concession. In a March 28, 1997, meeting with the president, McEntee, Sweeney, and two other union presidents urged Clinton to reject a request by Texas Governor George W. Bush, a Republican, for federal permission to allow private companies to manage several Texas welfare programs, which could have meant the loss of 5,000 public jobs. Weeks later, Clinton sided with McEntee and labor, which Bush complained would cost the state $10 million a month.
It’s one thing to micromanage the national political party from the White House in unprecedented fashion, and unabashedly sell access to the White House, Air Force One, Camp David, and so forth, to the party’s biggest patrons. And as we chronicled in The Buying of the President [1996], Bill Clinton has a long history — going back two decades to Arkansas — of accommodating government policies to the agenda of the most powerful and generous corporate angels.
But what if a president’s naked malleability, his willingness to bend policies to money, actually violates and jeopardizes our national security? What if a U.S. company headed by the Democratic Party’s most generous individual patron in the 1990s violates federal laws involving national security? And after this happens, what if the company continues to get government contracts and even an export waiver signed by the president himself, worth millions of dollars — over the objections of Justice Department prosecutors? All of this did in fact occur, against a backdrop of espionage and intrigue, of dozens of illegal campaign contributions from foreign nationals with no real assets, of nuclear secrets systematically stolen from our most advanced laboratories over many years, and all of it led back to one country — China.
America, however, has barely noticed. While most of the country was distracted by the news media’s frothy coverage of the Monica Lewinsky affair in 1998, investigative reporter Jeff Gerth and his colleagues at The New York Times uncovered something quite remarkable. Their findings prompted several government investigations and won the newspaper the Pulitzer Prize in 1999. But hundreds of unanswered questions remain, and, unfortunately, no one seems particularly eager to answer them.
After the Tiananmen Square massacre in 1989, the export of American satellites for launching on Chinese rockets was suspended. Since then, such a commercial deal can occur only if the president of the United States concludes that the export is in the national interest and a waiver is granted.
In 1992, after President Bush had approved a waiver, and an American satellite was subsequently launched on a Chinese rocket, several senators, including Al Gore, wrote to the Bush administration to complain that China was using the launchings to “gain foreign aerospace technology that would be otherwise unavailable to it.” In the final days of the 1992 presidential campaign, Gore, then Clinton’s running mate, charged that Bush “has permitted five additional American-built satellites to be launched by the Chinese. . . . President Bush really is an incurable patsy for those dictators he sets out to coddle.”
Unfortunately, far more than Chinese leaders were coddled by the Clinton-Gore administration and the Democratic Party, under vastly more serious circumstances. More chilling, it appears there were no “patsies” involved, only consenting adults. In its first four years, the Clinton administration awarded 10 waivers to China, one more than Bush. But the number of waivers is not really the issue.
Almost as soon as Clinton and Gore took office in January 1993, the Chinese and U.S. corporations doing business in China began lobbying intensely to “educate” the new administration to look beyond the country’s poor human-rights record. In the 1992 election, dozens of U.S. companies active in China had given millions of dollars to the Democratic Party. By May 1993 the president reversed his campaign posture and awarded China most-favored-nation trade status. Even though the law requires the president to review the MFN determination each year, it has never been seriously in doubt since Clinton’s first months in office.
One of the most aggressive of those companies was Loral Space and Communications Ltd., which manufactures satellites and is headed by Bernard Schwartz. Loral and Schwartz have contributed at least $1.9 million to the Democratic Party since 1991 and are No. 7 on the Center’s “Top 50 Patrons” list of soft-money donors.
In 1994, Schwartz was awarded one of the coveted seats on the late Commerce Secretary Ronald Brown’s trade mission to China. Brown helped Loral seal a multimillion-dollar mobile telephone satellite network deal in Beijing. Schwartz was understandably pleased, and a few weeks later White House Deputy Chief of Staff Harold Ickes wrote in a memo to the president that Schwartz “is prepared to do anything he can for the administration.” And he did. In the 1995-96 election cycle, Loral and Schwartz gave the Democratic Party more than $600,000, making Schwartz the largest single individual donor to the party that year.
During the 1990s the Chinese government courted companies like Loral to launch its satellites. Both Chinese and American companies wanted the U.S. government to loosen its export licensing rules regarding satellites. Specifically, they wanted satellite export licensing decisions to be made by the Commerce Department, not the more restrictive State Department. Billions of dollars were at stake — an estimated 14 commercial communications satellite launchings annually, each costing several hundred million dollars. C. Michael Armstrong, then the chief executive officer of Hughes Electronics Corporation, another satellite manufacturer, met with then-Secretary of State Warren Christopher, and requested that satellites be regarded as commercial, as opposed to military, goods. Christopher agreed to conduct a detailed interagency review with officials from the Defense Department, the National Security Agency, the CIA, and other agencies.
Soon, however, a majority of the interagency group, including Christopher, had concerns about the security ramifications, disagreeing with Loral, Hughes, and the aerospace industry generally. They thus recommended that satellites continue to be categorized as military on the State Department’s munitions list. Commerce Secretary Brown, a former chairman of the Democratic National Committee and a prolific fundraiser, appealed the decision to the president. Clinton sided with Loral and the industry, in a decision that was publicly announced in March 1996. The Commerce Department thus was entrusted with the national security issues surrounding satellite technology.
The decision came at an inopportune time. Days earlier, China had heightened tensions in Asia by firing ballistic missiles with dummy warheads just 30 miles offshore of Taiwan. But the United States was now easing technology transfers and loosening the Tiananmen Square killings-era sanctions vis-à-vis China.
Worse, weeks earlier a Chinese rocket carrying a $200 million Loral satellite had crashed seconds after liftoff in southern China, killing and injuring civilians on the ground. The China Great Wall Industry Corporation — the Chinese government’s missile, rocket, and launch provider — asked Loral to help pinpoint the cause of the accident. In the collaboration that ensued, engineers from Loral and other companies identified potential causes that the Chinese engineers had overlooked. As a result, China may be able to improve the accuracy of its intercontinental ballistic missiles (ICBMs), 13 of which are aimed at U.S. cities. The Pentagon and the CIA found that both Loral and Hughes had “greatly damaged U.S. national security.” The State Department warned White House aides that Loral had engaged in “unlawful” and “criminal” activity. The companies have steadfastly denied any wrongdoing. The Justice Department began a formal criminal investigation into the matter.
Amid all this, in the chutzpah department, Loral had another satellite deal pending with the Chinese, and once again wanted a waiver from the president. Samuel “Sandy” Berger, Clinton’s national security adviser, and other administration officials recommended that Loral be given the green light, although they acknowledged in a memorandum to Clinton that such a decision might be perceived as letting Loral “off the hook on criminal charges for its unauthorized assistance to China’s ballistic missile program.” Meanwhile, Justice Department prosecutors warned that approving the waiver request would seriously jeopardize the Loral investigation.
On February 18, 1998, the president approved the deal and signed the waiver. It was treated as an urgent matter inside the White House not because of pressing national security exigencies, but because Loral faced heavy fines if the project was delayed any further.
The wheeling and dealing were not occurring in a vacuum. Months earlier, in July 1997, the president had been briefed that China, through years of spying and outright theft, had obtained some of the most sensitive U.S. military technology, including nuclear weapons design. And the Democratic Party was deeply embroiled in scandal over illegal contributions from China, part of a systematic campaign to influence the 1996 U.S. presidential election. The Senate Governmental Affairs Committee had recently found “strong circumstantial evidence that the Government of the People’s Republic of China was involved in funding, directing, or encouraging some of these foreign contributions.” Clinton had been criticized for months for repeatedly stonewalling requests from the Senate committee and the news media for information, and more than 45 witnesses had fled the country or invoked the Fifth Amendment. The president and his administration, the Senate committee found, “took no action whatsoever to persuade such individuals to cooperate.” More foreboding, 80 percent of the illegal foreign contributions had been raised by two longtime Clinton friends, John Huang and Charlie Trie; Huang took the Fifth and Trie fled to China. (Huang later decided to cooperate with the Justice Department and pleaded guilty to one felony charge; Trie voluntarily surrendered to U.S. authorities in February 1998 and pleaded guilty to violating federal campaign finance laws the following May.)
At the very least, it strains credulity that any president, including Clinton, would have approved the multimillion-dollar waiver to this company under all these troubling circumstances if no money had passed into the party coffers. In fact, well over $1 million was lavished upon the Democratic Party. No one can plausibly suggest — although the president, his aides, and Loral have vainly tried — that Schwartz and his satellite company did not get special consideration because of the cash.
“I have never spoken to the president of the United States about my interest in this part of our business,” Schwartz told the Center. “I think it would be an abuse of the friendship.” He stressed that he has been a loyal, active Democrat since the 1950s and has never given money with a notion toward getting something back. “I’m feisty about this,” he said. “You know, I don’t think it’s any of your goddamned business. I am answering these things somewhat reluctantly because it really is none of your business whom I vote for and whom I give money to. I was chairman of a company that had 35,000 employees in the United States, representing one of the most significant industries in America. I could have access to anybody I wanted. . . .”
In 1999, a select House committee chaired by Representative Christopher Cox, a Republican from California, produced an 872-page report that was unanimously approved by its five Republican and four Democratic members — a rare feat of bipartisanship in Washington these days. The committee found that China’s “acquisition efforts [of American military technology] over the past two decades” had been a “serious, sustained” activity. The committee specifically criticized Loral and Hughes for passing “illegally transmitted” information to the Chinese that was “useful for the design and improved reliability” of future Chinese ballistic missiles.
The report said that the Clinton administration’s policy of permitting businesses to police their own technology sales abroad has not worked, because the national security interest “simply may not be related to improving a corporation’s ‘bottom line.’ “
But it sure worked well for the companies, China, and the Democratic Party.
At a fundraising dinner in the elegant Hay-Adams Hotel, across Lafayette Park from the White House, a major DNC donor brought up a business grievance with President Clinton. The donor wanted to launch a business venture that happened to be opposed by environmental activists, and he was concerned that Interior Secretary Bruce Babbitt might block it.
Clinton asked, “Do you think we can pass a decent bill in this Congress?” When the donor said yes, Clinton responded, “Why don’t you give me an outline of what you want and let me work with the government on it?” During that same dinner, the president gave the party patrons his views about money and politics. “I think it’s OK if your investment gets you influence,” he told them, “but your investment shouldn’t get you control.”
There may be no more dramatic example of influence and what money can buy in Washington than the case of Atlantic Richfield Company. What follows is a case study of how “the enormous ambitions of a multibillion-dollar oil company, and a beleaguered president and his political party bent on maintaining control of both the White House and a governor’s seat, converged. The same administration that waxes eloquent about global warming quietly, legally, “worked with the government” at all levels for the fossil-fuels industry, thereby opening up more than 4 million acres of supposedly untouchable federal land.
ARCO was the only oil company to make the Center’s “Top Fifty Patrons” list of soft-money contributors to the Democratic Party. (ARCO’s total contributions of $1.3 million placed it at No. 17). Oil companies “invested” $35.2 million in national party committees and congressional candidates from 1987 to April 1998, and Republicans received nearly three times more money than Democrats. In fact, the GOP’s largest oil company contributor was ARCO, which gave $4.9 million.
In 1988 a former oil man was elected president of the United States. ARCO was the largest soft-money donor to the Republican Party during George Bush’s election and tenure as president, contributing $713,470 from 1987 to 1992. At the 1992 Republican National Convention in Houston, who can forget the indelible image of President Bush and Vice President Dan Quayle standing on the caboose of a “Victory Train,” waving to a happy, cheering crowd at the lavish ARCO reception? While president, Bush got an ARCO provision to promote reformulated gasoline inserted into the Clean Air Act, and his White House also pushed unsuccessfully for opening up Alaska’s Arctic National Wildlife Refuge to oil drilling. About 80 percent of ARCO’s oil reserves are in the United States, mostly in Alaska.
In 1993 the company discovered oil in the “Alpine” region of Alaska, on the eastern border of the National Petroleum Reserve. The reserve was created by Congress in 1923, under President Warren G. Harding, for emergency use only. No president and no Congress had ever acceded to the oil interests and opened up this pristine land for commercial drilling — not during the Depression, World War II, or the energy crisis of the 1970s. Ronald Reagan’s Interior Secretary, James Watt, held a few lease sales in the early 1980s, but the oil companies weren’t very interested at the time. Now, with the exciting Alpine discovery and geological surveys also indicating sizable oil deposits in the adjacent reserve, ARCO wanted to do the impossible: get Washington to reverse more than 70 years of policy and precedent and permit oil production on the reserve.
No plausible case could be made that an energy emergency existed, however, and by this time ARCO’s good friend George Bush had been evicted from the White House. But the company still had some reason for optimism. Its chief lobbyist in Washington, Robert Healy, had helped write the Democratic Party platform in 1992 to include wording “acceptable to energy interests.” ARCO loaned the Clinton/Gore 1992 Inaugural Committee $100,000, and had given at least $268,317 to the Democratic National Committee. In addition, ARCO is represented by Washington super-lobbyist Charles Manatt, a former chairman of the Democratic National Committee, whose former law partner, Mickey Kantor, had run the Clinton/Gore campaign in 1992 and later served in two Cabinet posts.
Although the Freedom of Information Act has always exempted the White House and Congress from public disclosure requirements, thereby making it more difficult to discern who’s actually doing what, we’ve gotten a few public glimpses of the coziness between ARCO and the Clinton White House. In the 1993-94 election cycle, for example, ARCO gave the DNC $274,500. Then, in June 1994, at a White House luncheon with business executives, the president presented Lodwrick Cook, then the company’s chairman, with a birthday cake. Meanwhile, from 1990 through 1994, ARCO was the top political giver in Alaska, contributing about $750,000 to state parties and candidates. In 1994, Democrat Tony Knowles eked out a surprise 536-vote victory to become the governor of Alaska, a traditionally Republican state. He quickly expressed his desire to establish “a new partnership” with oil companies, and soon he had taken up their cause of lobbying Washington to open up the National Petroleum Reserve in his state. (This was regarded as more realistic than opening the more bountiful Arctic National Wildlife Refuge, which the Clinton Administration had declared off-limits to development.) In January 1995, Knowles slept overnight in the White House. In December 1995 the Alaska Democratic Party sponsored a black-tie, $1,000-a-plate fundraising dinner in Anchorage for the “Governor’s Fund” — Knowles’s political slush fund. Oil companies poured in $21,000. Three months later, in February 1996, Lieutenant Governor Fran Ulmer attended a White House coffee with the president.
Meanwhile, on the lobbying front, Manatt, ARCO’s top hired gun, attended a White House coffee with Clinton and Kantor in May 1995. In October 1995, Healy, ARCO’s top in-house lobbyist, attended a White House coffee with, among others, Vice President Gore and Marvin Rosen, the DNC’s finance chairman. The ARCO Foundation gave $10,000 to the vice president’s Residence Foundation, a not-for-profit organization that has raised funds for improvements to the vice president’s official home. And as Clinton and Gore sought reelection in 1996, ARCO nearly doubled its support to the DNC, to $496,072.
The real push from ARCO to open up NPR-A (National Petroleum Reserve-Alaska) began in earnest in late 1996. In November, Air Force One stopped in Anchorage for a few hours to refuel, and Governor Knowles reportedly used the occasion to lobby Clinton to open up the reserve. Days after Clinton was reelected, Brooks Yeager, then the Interior Department’s Deputy Assistant Secretary for Policy, informed environmental organizations in Alaska that NPR-A would soon be the subject of an environmental impact statement — the first step toward opening it for leasing.
Internal government documents obtained by the Center for Public Integrity show that five senior ARCO executives — among them J. Ken Thompson, the president of ARCO Alaska, Inc., and Healy — met with Babbitt and other high-ranking officials of the Interior Department in Washington on December 9. The agenda for the meeting consisted of just two items: “Alpine Project Update” and “NPR-A (Federal Lease Sale, State/Native Land Exchange).”
Weeks later, in January 1997, Secretary Babbitt ordered the Bureau of Land Management to begin preparing a draft Environmental Impact Statement (EIS) for the reserve. In February, Knowles met with Babbitt, and on February 12 the Interior Department announced the details of the process by which 4.6 million acres of the 24-million-acre reserve might be opened to oil and natural-gas development. Babbitt personally explored the reserve on foot in July 1997. On August 6, 1998, the review completed, the Interior Department announced that all but 580,000 acres of the 4.6-million-acre tract would be leased. “This is a good plan,” Babbitt said in making the announcement, “based on sound science and a very public outreach process.”
In November 1998, Governor Knowles was reelected easily. But he wasn’t the only winner. The following May, the results of the lease bidding were announced. ARCO tendered the winning bids on 99 of the 133 tracts that were bid on, and if its merger with British Petroleum is approved the new conglomerate would end up with 19 more. In all, six oil companies spent $104 million on the winning bids.
The Interior Department estimates that the leased land has from 300 million to 2 billion barrels of oil, with a potential value of $2.34 to $36 billion. For a relative pittance and some face time with politicians in Alaska and Washington, ARCO had hit a multibillion-dollar bonanza.
The reversal of U.S. policy on NPR-A went almost unnoticed by the news media, environmental organizations, and the public. There were no dissenting voices at the perfunctory congressional oversight hearings, though since then a number of environmental organizations have sued the Interior Department, alleging, among other things, that its environmental impact statement is inadequate. Internal government documents obtained by the Center show that officials of the Interior Department acknowledged that “the timetable [was] very compressed” and that such a review normally takes roughly three years — twice as long as it actually took. Since when does the federal bureaucracy move so fast? Answer: when the wheels have been greased.
Interior Secretary Bruce Babbitt; former ARCO chairman Lodwrick Cook; Robert Healy, ARCO’s in-house lobbyist; and Alaska Governor Tony Knowles all declined the Center’s requests for interviews. Charles Manatt, ARCO’s outside lobbyist, told the Center that he was not involved in the matter.
Former Colorado Governor Roy Romer succeeded Fowler as the chairman of the Democratic National Committee, which in the 2000 election will almost certainly surpass the prodigious fundraising it did in 1996. (In September 1999, Romer was replaced by Philadelphia Mayor Edward Rendell.) “I have the feeling that the party should be there advocating the general policy interest on behalf of the constituents, the party should be there to help the constituent know how to get access, but I don’t think the party should be an advocate of a specific decision, particularly that has financial self-interest of a large sum to the clientele,” Romer told the Center weeks before he left the DNC. “I’m trying to make that distinction for the welfare mother. I mean, I think the party has an obligation to help the welfare mother to know where to go now that we’ve got welfare reform and your checks run out. What do you do?”
Ah, the Democratic Party dilemma, vacillating between “I feel your pain” concern for the poor and persistent pandering to the rich. “I was in the Hamptons this last weekend,” Romer told the Center. “You know what I mean? It’s a place where the height of the hedges kind of determines the wealth of the occupant in the home. You know what I mean? You see, I’m walking down this hedgerow and I can’t see the homes, and I come to a driveway and I lean down to see if I can see the side of the mansion. Well, I’m out there raising money trying to help that welfare mother.”
The Democratic Party Top Fifty Patrons
$3,671,809
$3,593,815
$2,673,983
$2,644,927
$2,075,913
$1,978,691
$1,949,500
$1,877,605
$1,789,064
$1,660,680
$1,505,600
$1,476,138
$1,459,029
$1,456,300
$1,397,161
$1,382,500
$1,354,038
$1,337,500
$1,256,025
$1,237,582
$1,233,430
$1,232,000
$1,216,872
$1,179,400
$1,168,599
$1,164,109
$1,178,550
$1,102,764
$.1,149,250
$1,081,333
$1,066,500
$1,065,356
$1,030,000
Employees, Washington
$1,020,250
$1,006,454
$964,033
$954,600
$897,960
$893,625
$886,958
$885,700
$864,967
$859,299
$807,087
$794,600
$772,801
$771,319
$727,000
$724,842
$712,720
This list is based on soft-money contributions to the Democratic National Committee and its affiliated committees from January 1991 through June 1999
Sources: Federal Election Commission, Common Cause
Books
The Buying of the President 2004
- Introduction
- Equal Rights, Unequal Protection
- Private Parties
- George W. Bush - The Texas Years
- George W. Bush - The War President
- George W. Bush - The Administration
- Wesley Clark
- Howard Dean
- John Edwards
- Richard Gephardt
- Bob Graham
- John Kerry
- Dennis Kucinich
- Joe Lieberman
- Carol Moseley Braun
- Al Sharpton
- Conclusion
- Acknowledgements
The Buying of the President 2000
