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Introduction

“Than politics the American citizen knows no higher profession — for it is the most lucrative.”
— Alexis de Tocqueville

“The government, which was designed for the people, has got into the hands of their bosses and their employers, the special interests. An invisible empire has been set up above the forms of democracy.”
— Woodrow Wilson

This is the sixth published study by the Center for Public Integrity. Unless otherwise noted, the following individuals researched and wrote key portions of the text.

Greg Bologna is a senior associate at the Center. For years, he was co-editor of the annual reference publication Washington Representatives. He has a B.A. in political science from George Washington University.

Bill Hogan, who edited this study, is a managing editor of National Journal. An award-winning investigative journalist, Hogan formerly was the senior editor of Regardie’s magazine.

Dan Benson researched and helped to write Buying the American Mind, which the Center published in December 1991. Benson also works as a policy research analyst with a Washington law firm and is pursuing a master’s degree in economics at George Washington University.

John Kruger has had internships with the Washington office of Radio Free Europe and The Wall Street Journal in Brussels. He is a senior at American University, majoring in print journalism.

Charles Lewis is the founder and executive director of the Center for Public Integrity. He is the author of the Center’s premiere study, America’s Frontline Trade Officials. For 11 years, he did investigative reporting at ABC News and CBS News, most recently as a producer for 60 Minutes.

Samuel Loewenberg is a student at The Evergreen State College, in Olympia, Washington, where he has concentrated on political theory, literature and writing. Before coming to the Center, he was an intern at National Public Radio.

Orion Riggs is a junior at the University of Southern California in Los Angeles, where he is majoring in international relations and economics.

Christine Stavem is a senior associate at the Center and was the principal researcher for the recent study, Under Fire: U.S. Military Restrictions on the Media from Grenada to the Persian Gulf. She holds a journalism degree from the University of Arizona.

EXECUTIVE SUMMARY

Despite all the fiery rhetoric against special interests, despite all of the anti-Washington populism, most of the major presidential candidates are relying heavily on Washington “insiders” to make their way to the White House.

Some of Washington’s most prominent lobbying firms — Cassidy and Associates; Hill and Knowlton; Black, Manafort, Stone and Kelly; and Robinson, Lake, Lerer and Montgomery — have or recently have had senior officials who are advising rival presidential candidates. At least one Washington attorney, former Carter White House aide Stuart Eizenstat, has been simultaneously advising the Clinton and Kerrey campaigns.

FOREIGN AGENTS

At a time when the United States is suffering under the burden of large trade deficits, at a time when virtually every candidate has been critical of Japan, several “foreign agents’’ registered at the Justice Department have been advising the presidential candidates. Four presidential campaigns — Clinton, Harkin, Kerrey and Bush — have 31 advisers who are personally registered as foreign agents or whose firms are registered as foreign agents.

President Bush once again has James Lake as senior communications adviser to the campaign. Lake, of Robinson, Lake, Lerer & Montgomery, is perhaps best known for his high-priced representation of such clients as the Japan Auto Parts Industry Association, Mitsubishi, Suzuki and others.

A Bush Adviser and His BCCI-Related Client

However, in recent months Lake and his firm also have been representing the Abu Dhabi Investment Authority, the majority shareholder of the Bank of Credit and Commerce International (BCCI). Lake and his firm received $201,375 in fees alone from their work on behalf of the client.

Lake’s firm reported to the Justice Department that it had been retained because “various federal agencies could possibly take action on matters related to the Abu Dhabi Investment Authority.” Currently, there are seven federal grand jury investigations underway in connection with BCCI, in addition to possible enforcement actions by federal bank regulators.

Lake is the second Bush aide in recent months found to be under contract to BCCI-related clients.

Other notable foreign agents working for the president’s reelection campaign include Craig Fuller, who until recently was president of Hill and Knowlton, personally working on such accounts as Citizens for a Free Kuwait, Embassy of the People’s Republic of China, Sacilda, and the Canadian Macedonian Society. Charles Black, of Black, Manafort, Stone and Kelly, has represented UNITA, the government of Nigeria, the Kenyan government and the government of the Philippines.

Clinton

Governor Clinton has eight advisers who individually or whose firms have worked for overseas corporations or governments. For example, Thomas Hoog has represented the
People’s Republic of China, and his firm, Hill and Knowlton, represents Hitachi, the Embassy of Japan, the Government of Brazil, the Republic of Turkey, Fujisawa Pharmaceutical Co., and many other clients. Paul London has represented the Japanese Society of Industrial Machinery Manufacturers.

Clinton also has two advisers who are not currently registered at the Justice Department but who have done work on behalf of overseas clients. Paula Stern, who once chaired the International Trade Commission, subsequently has testified before her old agency on behalf of the Japanese Display Industry. Former Carter administration official Roger Altman is a partner with the New York-based Blackstone Group, which brokered the Sony purchase of CBS Records and Columbia Pictures.

Kerrey

Senator Kerrey has roughly 10 advisers who individually or whose firms have worked for overseas corporations or governments. Kevin Nealer is vice president of APCO Associates, formerly the lobbying arm of Arnold and Porter, the large Washington law firm. Nealer has represented an Australian interest, Pasminco, Inc., and APCO has such clients as Profilo Holding, A.S., the Government of Israel, the Canadian Meat Council, and Fujisawa USA. John Reply is a registered foreign agent, and he has represented the Canadian Forest Industries Council and the Council on Forest Industries of British Columbia. Stu Eizenstat is the managing partner of Powell, Goldstein, Frazer and Murphy, whose clients have included Hitachi, Koyo Seiko Ltd., Hoogovens Group BV, the Government of Nicaragua, and many others. Other Washington firms with a substantial foreign clientele who have advisers to Kerrey include Patton, Boggs and Blow; Robinson, Lake, Lerer and Montgomery; and Arnold and Porter.

Tsongas

The Tsongas campaign was the only organization which did not cooperate fully with the Center’s requests for information. The former senator’s campaign provided the names of three academic, non-lobbyist advisers, revealed that several other people have been also advising the campaign, and refused to divulge the names of those other individuals advising on trade matters.

HEALTH CARE

Bush

George Bush did not have a specific health care reform proposal until the year of his reelection bid. And for months, the Bush administration has been critical of the various Democratic health care proposals.

The president’s principal health care campaign adviser, Deborah Steelman, is also simultaneously a registered lobbyist with the Congress on behalf of Aetna, Blue Cross/Blue Shield of Missouri, Johnson and Johnson, Pfizer Pharmaceuticals and the Pharmaceutical Manufacturers Association.

Harkin

Considering Harkin’s liberalism, and his concern for the working people of this country, it is unusual that he has been reticent to advocate specific health care reforms.

However, as a Senator and the second-ranking member of the Senate Labor and Human Resources Committee, Harkin has received $270,404 from medical industry PACs.

Gerald Cassidy, of the lobbying firm of Cassidy and Associates, is working with the Harkin campaign, primarily as a fundraiser. His firm represents 17 medical interests, including hospitals, associations, research institutions, and insurance plans.

Harkin campaign issues director Terry Lierman is president of Capitol Associates, and is registered as a lobbyist with Congress on behalf of at least eight health-related clients, including the Hutchinson Cancer Center and the National Cancer Research Coalition.

Tsongas

The Tsongas campaign also has unpaid policy advisers who are closely tied to the health care industry. For example, Kenneth Schwartz, a former Massachusetts state health official, now works for the Boston-based firm of Mintz, Levin, Conn, Ferris, Glovsky, Popeo. His firm’s clients have included hospitals and nursing homes, and Schwartz himself is a registered state lobbyist for the Massachusetts Association of Private Psychiatric Hospitals.

Joseph Avellone is director and senior vice president of Blue Cross/Blue Shield of Massachusetts. Another Tsongas adviser is Steve Rabin, who is registered with Congress as a lobbyist. His firm represents the American Nursing Association and Family Health International.

As an attorney, Tsongas, according to The Wall Street Journal (2/12/92), represented the American Insurance Association, mostly on environmental matters. But that group’s membership includes several large companies who “would benefit from Mr. Tsongas’ health proposals,” including Aetna, Cigna, Travelers Insurance, and Hartford Life Insurance Co.

OTHER FINDINGS

Few presidential candidates have railed more vociferously against “special inter¬ests” and Washington than Senator Harkin. And yet, in 1990, Harkin received more political action committee (PAC) money than any other member of the U.S. Senate. Meanwhile, his wife and key adviser Ruth Harkin is an attorney with one of the most “inside” law firms in Washington, Akin, Gump.

Candidate Bill Clinton comes from a state with just one percent of the nation’s natural gas. But in November 1991, Clinton said, “We must rely less on imported oil, and more on cheap and abundant natural gas. . . .” Adviser Paul London consults in Washington for the Natural Gas Supply Association (London told the Center he does not advise Clinton on Natural Gas); adviser Skip Rutherford is vice president of Arkla, Inc., a Little Rock-based natural gas company partly owned by Jack Stephens, who is a key fundraiser for Clinton.

Several economists, at leading universities or Washington “think tanks,’’ each have been advising at least two presidential candidates: C. Fred Bergsten, Jeff Faux, Benjamin Friedman, John Kenneth Galbraith, Clyde Prestowitz, and Lester Thurow.

INTRODUCTION

From grade school on, all Americans operate under an unfortunate conceit: that our national policies are derived from a uniquely altruistic synthesis of logic, reason, necessity, and responsiveness to the broad public interest.

We also undergo a quadrennial delusion that presidential candidates who have braved the wintry weather of Iowa and New Hampshire, who have stood virtually alone at factory gates and supermarkets “meeting” the voters, will over time transcend mere “politician” status. Through the grueling marathon of candidate debates and town meetings, radio call-in shows, and news media interviews, the battle-tested survivor theoretically will begin to look and sound more presidential and statesmanlike.

Against a backdrop of such great expectations and noble pretense, most public attention is understandably focused on the candidate himself — his past, his character, his public persona, his style, his delivery, his apparent command of the issues, and, in general, his public policy positions.

The articulated arguments and proposed policies of the presidential candidates are generally made — and received by the public — at face value. Significant issues all relating to America’s future — to how more than a trillion taxpayer dollars ought to be spent each year, for example — are glibly discussed dozens of times each campaign day. Precisely how the candidates have made these weighty judgments, or who has helped them to do it, is seldom addressed.

Therein lies the purpose of this endeavor.

Beyond the delegate counts and the 1992 political calendar, there is intense behind-the-scenes maneuvering by Washington’s power elites — the law, lobbying, and public relations firms and trade associations and the multimillion and multibillion dollar clients they routinely represent. The object of their attentions: any possible future president.

British statesman George Canning wrote more than a century ago, “Away with the cant of ‘measures, not men!’ — the idle supposition that it is the harness and not the horses that draw the chariots along.’’ The campaign process and even the prospective policies put forth by presidential candidates are obviously very important. But we also can glean vital information and insights about these aspirants by attempting to analyze just who it is these candidates have turned to for ideas and advice, for political and intellectual sustenance.

We have tried to conduct a thorough examination of the men and women currently advising the major presidential candidates in both parties, on a paid and an unpaid basis. Based on interviews with campaign officials and the advisers themselves, along with various Federal Election Commission reports, lobbying records from the U.S. Senate and House of Representatives, and Foreign Agent Registration Act documents filed with the Justice Department, this Center study is an attempt to shed some light on various domestic and foreign business entanglements and potential conflicts of interest.

THE 1988 PRESIDENTIAL CAMPAIGN, REVISITED

The genesis of this study actually occurred near the end of the 1988 presidential campaign. In October 1988, the CBS News program 60 Minutes led one of its broadcasts with a segment that tracked the day-to-day commercial activities of numerous unpaid advisers to presidential candidates George Bush and Michael Dukakis. The story, which later was nominated for an Emmy by the National Academy of Television Arts and Sciences, featured 10 unpaid advisers to Bush and three to Dukakis who were registered as “foreign agents” at the Justice Department.

60 Minutes reported that some of then-Vice President Bush’s campaign advisers included: James Lake, who with his firm had received $300,000 from Mitsubishi, Japan Tobacco and others; Charles Black, Paul Manafort, and Roger Stone, who with their firm had received $3.4 million in 1985 in foreign lobbying fees, including more than $900,000 from Philippine interests; former Assistant Secretary of State and Ambassador Richard Fairbanks, who with his firm had been hired by the Iraqi government after Iraq attacked the U.S.S. Stark, killing 37 Americans; press secretary Sheila Tate, whose firm had received more than $2.4 million for representing Saudi Arabian and Venezuelan interests in 1985 and 1986; Stuart Spencer, who with his firm had received $350,000 from the South African government from 1983 to 1985 and $25,000 a month from Panama in 1985 and 1986 for personally advising Manuel Noriega.

The Dukakis campaign had registered foreign lobbyists as well. Andy Manatos, a key fundraiser, had received $100,000 from Greece in 1987. Former Carter White House aide Anne Wexler worked for Canadian interests. David Sawyer and Scott Miller, who handled some of the television advertising for the Dukakis campaign, also had a two-year, $2 million contract with Colombia, as well as contracts with the exiled government of Panama and the government of the Philippines.

As political analyst and author Kevin Phillips told correspondent Mike Wallace: “I can’t think of any other country where you could take out a list of the people who have been involved in trade policy and at the highest reaches of politics in both parties, and then run down that list and pair them with countries and foreign interests that they represent. I can’t conceive of that in London; I can’t imagine that in Canberra or in Ottawa or Bonn. This is the United States.”

One of the reasons this story is so memorable to me is that I was the producer who initiated the project. But today, as we find ourselves in the midst of another national campaign, these issues are arguably more relevant than ever before. Since then, public cynicism about Washington has continued to rise, the nation has fallen ever deeper into recession, and the country continues to suffer from huge trade deficits. (The Commerce Department has calculated that for every $1 billion in the U.S. trade deficit, approximately 25,000 American jobs are eliminated; the trade deficit is approximately $70 billion.) In 1992, the specter of former U.S. officials and political campaign consultants trading on their Washington access and influence on behalf of America’s economic competitors continues to be repulsive and offensive.

In setting out to examine the current presidential campaign in the context of the kind of information which was developed in the 1988 report, the scope and modus operandi of the inquiry have been broadened.

One issue on practically every American’s mind, for example, is health insurance. As we frequently hear, 38 million Americans have no health insurance coverage, and for those people with insurance, premiums continue to rise and what is actually covered seems to be decreasing.

Like everything else in Washington, however, this is not a sterile setting for such an important national decision. Insurance companies, doctors, hospitals, and drug manufacturers aren’t exactly disinterested parties to the decision-making process. Indeed, as Common Cause magazine writers Viveca Novak and Vicki Kemper have reported, this $700 billion a year industry has been trying to stave off comprehensive reform in Congress and at the White House. More than 200 political action committees (PACs) representing the “medical industrial complex” have contributed more than $60 million to congressional candidates since 1980. More than $18 million of that money went to members of the four congressional committees with jurisdiction over health-related issues.

In such an aggressive, high-stakes atmosphere, is it realistic to think that these special interests would sit out the presidential campaign?

INVESTIGATIVE METHODOLOGY

We have no illusions, and certainly make no assertions, that the information gathered about the policies and the advisers of the presidential candidates is complete. We have chosen to focus on the most broadly relevant policies of the major aspirants: the economy, domestic and international; foreign policy; and health care.

The Center staff sought diligently to gather information about all paid and unpaid advisers to the presidential candidates. One campaign was called no less than 30 times over a two-month period. Something so seemingly simple as defining a campaign adviser became complicated and subjective. Some presidential campaigns appeared to treat the release of information about advisers as a kind of credential-building, credibility-boosting exercise.

Other campaigns were wary, vague, and elusive about providing the Center with names at all. We discovered that some of the people listed as advisers had had a single conversation with the candidate or, in some cases, had met only once with the campaign’s issues director. Some campaigns provided us with lists of names and then retracted some of the names, issuing new, revised compilations.

The bottom line is that, as presidential candidates are not required to disclose the names of their unpaid advisers, we had little choice but to rely on information provided by their respective campaigns.

We attempted to corroborate this initial data by contacting the advisers directly and by reviewing major news media coverage of the various candidacies. In a few cases, we also received specific names from other sources, which we then tried to verify.

Because of the exigencies and logistics of this information-gathering process, the lists of campaign advisers in this study are probably incomplete. Nonetheless, the entire, imprecise exercise affords a rare and valuable glimpse into potential conflicts of interest and the larger issues they might represent.

The various names were then checked at the Justice Department’s Foreign Agent Registration Act office, House and Senate lobbying record offices, and the Federal Election Commission. If a campaign adviser was not personally registered at the Justice Department, but his or her firm was, we still felt that the information was significant, for at least three reasons. First, the individual likely derives some of his or her income from the fees paid to the firm by its listed clients. Second, there is little doubt that the firm benefits from the perception, however tenuous, of access to the presidential candidate. And third, the General Accounting Office and others have documented that the disclosure law is poorly written, poorly enforced and largely ignored. Many people do not register, and when they do, their forms are incomplete or misleading.

Finally, there is the timeless issue our study raises, which we make no real attempt to address: Did the candidate merely attract specific advisers with specific interests and backgrounds because of his own previous statements and record? Or have these advisers directly influenced the thinking, and the public statements, of the candidate?

One thing is certain. Many of the policy advisers will use their association with the presidential candidates to boost their resumes and professional credentials. Which, for lobbyists and consultants operating in the mercenary culture of Washington, often translates, directly or indirectly, into more money.

Charles Lewis
February 21, 1992
Washington, D.C.