[Congressional Record Volume 143, Number 158 (Monday, November 10, 1997)]
[Senate]
[Pages S12442-S12447]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
MISSING HEARINGS FROM THE SENATE CAMPAIGN FINANCE INVESTIGATION.
Mr. LEVIN. Mr. President, on the last day in October, Senator
Thompson announced that the Senate Governmental Affairs Committee was
suspending its campaign finance hearings in part because the committee
did not have the caliber of witnesses and information to justify
continuing the hearings.
Mr. President, the Democrats on the Governmental Affairs Committee
were promised 3 days of hearings during September or October on a
number of unexamined issues involving important events during the 1996
elections. Had that commitment been kept, one of the days would have
been spent looking at the largest single transfer from a political
party to a tax-exempt organization in the history of American
politics--$4.6 million, which the Republican National Committee gave to
Americans for Tax Reform in October 1996, the final month before the
1996 elections.
As this chart shows, over two-thirds of the money which ATR received
in 1996, this tax-exempt organization, over two-thirds of that money
came from the Republican National Committee. The size of this transfer
is unprecedented. There is no record of an American political party
giving even $1 million to a tax-exempt organization, much less four
times that amount.
If the Democratic National Committee had given $4.6 million to a
labor union or environmental group in the month before the 1996
elections, I have no doubt that there would have been a searching
investigation of the facts, if not full scale public hearings--and it
would have been totally appropriate. But here--where the money was paid
by the RNC to a tax-exempt group whose efforts were aimed at attacking
Democrats--not a single hearing witness was called. Worse, the
Governmental Affairs Committee failed to interview a single person from
either the Republican National Committee or Americans for Tax Reform
about this transfer. Given its mandate, the Committee's failure to
investigate the $4.6 million was a highly partisan act which denied the
Senate and the American public important information.
But even without depositions or interviews or testimony, there is
enough evidence through publicly available documents and the limited
document production by the RNC, ATR, and some banks to piece together
the outline of a coordinated campaign effort involving ATR that appears
to circumvent hard and soft money restrictions, to duck disclosure, and
to misuse ATR's tax-exempt status--all of which calls out for an
appropriate investigation by the Department of Justice and the Treasury
Department.
Let's begin with what was said at the time about the $4.6 million
transfer. In public statements, both RNC Chairman Haley Barbour and ATR
President Grover Norquist denied that the money transfer was part of
any coordinated effort between the two organizations. Mr. Barbour told
the Washington Post on October 29, 1996, that ``he had no understanding
with Norquist about how the money would be spent,'' while Mr. Norquist
told the press that he had made ``no specific commitment'' to the RNC
on how ATR would use the money. In short, the two principals would have
the American public believe that in the final weeks before election day
1996, the RNC gave away $4.6 million to a supposedly nonpartisan,
independent organization with no understanding or expectation as to how
that money would be used.
Not only does common sense tell us that this is unlikely, but the
facts and documents behind this transaction indicate that it simply was
not so.
Let's look at what was happening around the time the money transfer
took place. For months prior to election day, Haley Barbour and the RNC
had been complaining about a television ad campaign funded by organized
labor and others criticizing the Republican Party on the issue of
Medicare. The RNC and Haley Barbour were telling anyone who would
listen that the ads were distorting the facts and that Republicans were
not out to cut Medicare. And yet, the RNC waited until October, the
final month before the election, to start spending funds to respond to
those ads. Here is Haley Barbour, at an October 25, 1996, press
conference, explaining the RNC's decision to delay spending:
[W]e made the decision not to borrow money last year or
early this year in order to try to compete with the unions
and the other liberal special-interest groups' spending. You
see, our campaigns do come into the real election season
late September and October without having spent all the
money that--to match what the unions were doing. And you
will see us--you are seeing now, and have been throughout
the month of October, you are seeing Republicans using the
resources that we've raised in voluntary contributions to
finish very strong, to make sure our message is in front
of voters when they are making their voting decisions.
What steps was the RNC taking to ensure that its message was in front
of voters when they are making their voting decisions in October? One
step was to funnel $4.6 million in soft money to ATR which used the
money on a massive direct mail and phone bank operation, targeting 150
congressional districts with 19 million pieces of mail and 4 million
phone calls.
The subject of the ATR mailings and phone calls was just what Haley
Barbour referred to in his statement to the press--Medicare. The title
of one ATR mailing says it all: ``Straight Facts About You, Medicare
and the November 5 Election.'' This mailing urged senior citizens to
ignore political scare tactics and stated ``[t]here's barely a
difference between the Republican Medicare Plan and President Clinton's
Medicare Proposal.''
Did the RNC know what ATR was going to do with the $4.6 million?
Haley Barbour and Grover Norquist told the American public no, but
let's look at a document produced by the RNC entitled, ``Memorandum for
the Field Dogs.'' I ask unanimous consent that this document and others
I will mention in my statement be included in the record after my
remarks.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See Exhibit 1)
Mr. LEVIN. This ``Memorandum for the Field Dogs'' is a document
which, again, came from the files of the Republican National Committee
and states the following in its entirety:
Re: Outside Mail and Phone effort,
Attached is a rotten copy of the 1st of 3 mail piece[s]
that will be sent to 150 selected
[[Page S12443]]
congressional districts it will be directed at [sic], ``a map
of which has been included for your viewing pleasure.''
We discussed this effort during Wednesday's conference
call.
This is an effort undertaken by Americans for Tax Reform.
They are attempting to warn seniors about Democrat Mediscare
tactics. . .''
This memo to the field personnel provides clear evidence that the RNC
had advance information about ATR's mailing effort. It shows that the
RNC had a copy of ATR's first direct mail piece even before it was sent
out. In the words of the memo, attached is a copy of the first of three
mail piece[s] that will be sent.
It shows that the RNC knew it was the first of three mailings, and
that it was being sent, not to specified cities or counties or zip
codes, but to specified Federal Congressional districts--150
congressional districts to be exact--that it will be directed at. And
to ensure that RNC field personnel knew precisely which districts had
been targeted, the memo includes a map * * * for your viewing pleasure.
The fact that the mailing targeted congressional districts, rather
than cities or zip codes, shows clearly an election-related intent. The
fact that this information was communicated to RNC field personnel
doing election-related work at the time is more evidence. The memo also
states that RNC field personnel had discussed the effort undertaken by
Americans for Tax Reform in a previous Wednesday's conference call. Any
fair reading of this memo throws cold water on the claim that there was
no understanding between the RNC and ATR about what ATR was doing.
But, one may ask, what evidence is there that the RNC knew when it
gave ATR the $4.6 million how ATR intended to spend it? Again, let's
look at the facts and the documents.
First, let's look at an October 29, 1996 invoice sent to ATR by the
John Grotta Co. This is the company that actually managed the direct
mail and phone bank effort for ATR in October 1996. It is a company, I
might add, that has also run direct mail campaigns on behalf of the RNC
and is owned by an individual--John Grotta--who is a former western
political director for the RNC. The invoice shows that ATR owed John
Grotta various amounts at various times throughout October 1996. The
grand total owed to the company, not including postage for the
mailings, was $3,325,498.60.
Based on an analysis of ATR's bank records, which are in Committee
files, on October 1, 1996, ATR had a total in its two bank accounts of
$294,078.50--a tenth of the cost of the direct mail-phone bank effort.
Lo and behold, though, in October 1996 the RNC began pumping money
directly into one of ATR's bank accounts. The $4.6 million total would
prove more than enough to pay for the direct mail-phone bank effort.
What a coincidence. Or was it?
A closer look shows that the $4.6 million was, in fact, not one
donation, but four payments spread throughout the month of October. And
if we compare the timing of each payment to the billing dates for the
direct mail-phone bank operation, we find that each donation came at a
very convenient moment for ATR.
According to the invoice, ATR owed John Grotta an initial payment of
$195,177.50 on October 7, 1996. On October 4, 1996, three days before
that initial payment was due, the RNC gave $2 million to ATR. The RNC
didn't write a check to ATR--it wired the funds directly into ATR's
bank account. Five days later, on October 9, ATR paid its bill to John
Grotta.
Two weeks after that, ATR faced another $1,313,677.40 in bills owed
to John Grotta. These bills were due on October 18 and October 22. And
what should happen on October 17, but that the RNC provided a second,
well-timed donation to ATR--this time in the amount of $1 million.
Again, this money was wired directly into ATR's account. Within days of
receiving it, ATR paid John Grotta $1,418,544.38.
ATR had another John Grotta bill due on October 24, 1996--this one in
the amount of $1,104,000. On October 23, 1996, however, the total in
ATR's bank account was $216,344.93. But once again, ATR got the money
it needed. On October 25, 1996, the RNC made a third well-timed
donation to ATR--$1 million wired into ATR's account. Within hours of
receiving this donation, ATR paid John Grotta $1,104,000.
One week later, at the end of the month, ATR faced another John
Grotta bill due in the amount of $607,776.72. On the day before that
bill was due, the total in ATR's bank account was only $70,085.65. But
on the next day, the very day that the $607,000 bill was due, the RNC
wired ATR a fourth and final, well-timed donation--in the amount of
$600,000. Within 2 hours of receiving the RNC donation, ATR paid off
its bill to John Grotta.
Are we supposed to believe that the timing and amounts of RNC
payments to ATR, when compared to the billing dates and amounts owed by
ATR to John Grotta, were mere coincidence? Are we supposed to believe
that the RNC's $600,000 payment just in time to pay a $600,000 bill was
sheer luck--a $600,000 coincidence? And that there was no coordination
or understanding as to how the RNC money would be used by ATR?
That's what Haley Barbour and Grover Norquist told the American
public. But let's look past those statements to some other things Mr.
Barbour and Mr. Norquist have said. In a news conference at RNC
headquarters on October 29, 1996, Mr. Barbour was asked about the RNC's
$4.6 million donation to ATR. Here's what he said:
We made a contribution to Americans for Tax Reform, which
is a conservative, low-tax organization. You'll see in our
FEC report now and at the end of the year that we've made
contributions to a number of organizations that are like-
minded, share our views, promote our ideas.
Then he went on to say the following:
As you know, when we do advertising, when we do advocacy,
no matter what we do, we typically have to pay for it, either
totally with FEC dollars or a mixture of FEC and non-FEC
dollars. While our fundraising among small donors has been
nothing short of spectacular, we often find ourselves in the
position where we cannot match up non-FEC funds with enough
FEC funds.
Those are the key words, ``We find ourselves in the position where we
cannot match up non-FEC funds with enough FEC funds.'' To put it in
words which are more familiar to the American public, ``We cannot match
up soft money with enough hard money.''
Haley Barbour went on to say at that press conference:
So, when we came to that point, we decided we would
contribute to several groups who are like-minded and whose
activities we think, while they're not specifically
political, we think are good for the environment for us.
In an article in the Washington Post on February 9, 1997, again
referring to the RNC contribution to ATR, Mr. Barbour was quoted as
saying that groups like ATR `` `have more credibility' in pushing a
political message than the parties themselves.'' So here we have Mr.
Barbour saying that the RNC gave ATR $4.6 million in soft money,
because it didn't have enough matching hard dollars to allow the RNC to
do the advertising itself, and further saying that having groups like
ATR do the political advertising provides more credibility than having
the RNC do it itself. And yet Mr. Barbour claims that he had no
understanding with ATR as to how the RNC's contributions to ATR would
be used?
Then there are Mr. Norquist's statements. When asked to comment on
the $4.6 million, Mr. Norquist told the Washington Post on December 10,
1996, ``We just ramped up on stuff we were going to do anyway. They,
the RNC, the conservative movement, knew the projects we were working
on.''
The facts and documents indicate that the RNC was using ATR as a
surrogate to do what the RNC itself had neither the hard dollars or the
credibility to do on its own. Such actions raise questions about
whether the RNC was deliberately circumventing hard money requirements
as well as disclosure requirements. They also raise questions about
whether the RNC was deliberately misusing a supposedly nonpartisan,
independent tax exempt organization to promote the RNC's campaign
agenda.
Americans for Tax Reform is a 501(c)(4) organization that is exempt
from taxation. A (c)(4) organization is supposed to be engaged in
social welfare that promotes the common good and general welfare of the
people of the community. Social welfare organizations may not engage in
campaign-related activity as their primary activity. The relevant Tax
Code regulation
[[Page S12444]]
1.501(c)(4)-1 describes the prohibited activity as ``direct or indirect
participation or intervention in political campaigns on behalf of or in
opposition to any candidate for public office.'' An analysis of ATR's
bank records for 1996 indicates, however, that the $4.6 million that
the RNC provided was more than two-thirds of ATR's income. The fact
that RNC funds outmatched ATR's other funding by a 2-1 margin raises
the issue of whether the RNC funding made electioneering ATR's dominant
pursuit in violation of its tax exempt status.
The tax abuse issue doesn't end there. Up to this point, for
simplicity's sake, I've been referring only to Americans for Tax
Reform, the 501(c)(4) organization. But ATR has an affiliate, run by
Grover Norquist out of the same office, called the Americans for Tax
Reform Foundation. This foundation is a 501(c)(3) organization which is
prohibited by Federal tax law from engaging in any campaign activity.
But it turns out that the foundation was very much engaged in the
direct mail-phone bank operation and served as a second conduit for RNC
funds spent on that operation. Of the $4.6 million provided by the RNC,
ATR actually transferred about $2.3 million to the foundation which, in
turn, paid almost half the direct mail-phone bank bills. In effect
then, the RNC funneled soft money through two tax exempt
organizations--one a 501(c)(4) and one a 501(c)(3)--to pay for an
advocacy effort it could not do on its own due to a lack of matching
hard dollars. ATR paid approximately $1.8 million for the operation,
while the ATR Foundation paid approximately $1.5 million.
How do we know? Believe me, Mr. President, it wasn't easy to find
out. The committee subpoena for ATR bank records was intended to cover
the ATR Foundation, and the bank was willing to produce the
foundation's records, but felt it could not do so under the wording of
the subpoena without ATR's consent. When the minority asked ATR to
allow the bank to produce ATR Foundation records, ATR refused. And when
Senator Glenn asked the committee chairman to issue a new subpoena to
the bank explicitly requesting ATR Foundation records, the request was
ignored. So we were forced to piece together the foundation's role from
the documents we already had.
To make a long story short, we followed the money. On October 4,
1996, the RNC wired $2 million to ATR. On October 17, the RNC wired
another $1 million to ATR. The next day--October 18--ATR transferred
$508,000 to the ATR Foundation. Four days after that--on October 22--
ATR transferred another $851,000 to the ATR Foundation. On October 25,
the RNC wired yet another $1 million to ATR. That very day ATR
transferred $1 million to the ATR Foundation. The result is a pattern
of RNC money coming into ATR and then being used by ATR either to pay
the direct mail-phone bank bills directly, or going an extra step of
being passed by ATR to the ATR Foundation which then paid bills. What
makes this pattern all the more intriguing is that ATR bank records for
the year-and-a-half preceding October 1996 do not include a single
month in which ATR transferred money to its foundation. Yet in October
1996, ATR gave its foundation over $2 million.
Why did ATR take this extra step and involve its foundation? We'd
like to ask Mr. Norquist, but so far have been denied any opportunity
to do so.
How do we know, then, that the foundation used RNC funds to help pay
for the direct mail-phone bank effort? We found two types of evidence.
First, comparing the October 29 John Grotta invoice to ATR bank records
shows that, for every recorded bill payment but two there is a
corresponding wire transfer from ATR's bank account to John Grotta. The
two exceptions are two bill payments that were both shown as made on
October 25, 1996--one in the amount of $468,000 and one in the amount
of $1,104,000. Both payments are shown on the invoice as having been
made by ATR, but there is no corresponding wire transfer from ATR's
bank account. However, both payments were made after ATR had
transferred over $2 million to the ATR Foundation. Common sense tells
us that the foundation must have paid the bills on ATR's behalf. Of
course, having been denied access to ATR Foundation bank records, we
don't have the bank records documenting foundation payments to Grotta.
However, we do have one of the mailings that this money paid for. And
right there, in black and white, underneath the heading ``Straight Talk
About You, Medicare & the November 5 Election'' are the words, ``Paid
for by AMERICANS FOR TAX REFORM FOUNDATION.''
The documents and public statements of Mr. Barbour and Mr. Norquist
indicate that RNC soft money went through ATR and ATR's 501(c)(3)
foundation and paid for a direct mail-phone bank operation that, if the
RNC had done it directly, would have required either all hard money or
a hard money-soft money split. Was the RNC laundering money through the
ATR affiliates to avoid having to use any hard money to pay for the
mailings and telephone calls? Was the RNC funnelling payments through
the ATR affiliates to capitalize on ATR's greater credibility? Was the
RNC knowingly misusing ATR's tax exempt status by causing
electioneering to become the primary activity of the (c)(4)
organization and by passing funds through a (c)(3) foundation that is
prohibited from engaging in campaign activity? The evidence is powerful
and should have been explored at a committee hearing.
There's more. The RNC's $4.6 million paid for more than the John
Grotta direct mail-phone bank operation which cost about $3.3 million
plus postage. Although Mr. Norquist told the Washington Post on
December 10, 1996, that ATR ``didn't do televised issue ads,'' the
evidence is overwhelming that ATR did. One ad, of which we have a
videotaped copy, attacked then-Representative Robert Torricelli, the
Democratic candidate for Senate in New Jersey for allegedly missing
votes. A company called Title Wave sent ATR an invoice for $8,524 to
produce the ad, which was called ``Torricelli/`Missing'.'' Invoices
from Mentzer Media Services, Inc., charged ATR $325,230 for a media buy
in New York/New Jersey media markets and another $56,656.25 for media
buys in Philadelphia/New Jersey media markets to keep the ad on the air
during the month of October right up to November 4, the day before the
election.
RNC funds delivered to ATR were used to pay for the ad. On October 4,
1996, the same day it received $2 million from the RNC, ATR wrote a
$4,000 check to Title Wave as partial payment on the ad's production
costs. Two weeks later, ATR wrote a $4,900 check to a company called
Soundwave. The memo at the bottom of the check stated that it was
payment on an invoice for the ``Torricelli ad.'' And beginning on
October 8 through the end of the month, ATR's bank records show a
series of wire transfers to Mentzer Media Services totaling $374,830
for the media buys. At the beginning of October, ATR's bank account
balances had stood at just over $290,000. After receiving the influx of
RNC dollars, ATR spent over $383,000 on an attack ad against the
Democratic senatorial candidate in New Jersey.
Documentary evidence suggests ATR's involvement with other television
ads during the 1996 election season. Two were allegedly sponsored by an
ATR affiliate called Women For Tax Reform, which was formed in August
1996, housed in ATR's offices, headed by ATR's Executive Director
Audrey Mullen, and which has had no apparent existence apart from the
two ads. Both ads attacked President Clinton by name with one scheduled
for airing on television in Chicago in August during the Democratic
Convention.
In addition, the RNC produced out of its files the script of a
television ad which was apparently designed to be sponsored by ATR and
used to attack Democratic candidates running for open seats. The
document states at the top, ``RNC-TV/Open Seat TV:30/`Control'.'' The
ad requires inserting a photo of a Democratic candidate, stamping
``Wrong!!'' over it, and then inserting the ``Democrat Tax Record''
under the photo. The last line of the ad is: ``For more information
call Americans for Tax Reform.'' At the bottom of the document, in
small type, it states: ``As of 10/15/96 4:50 PM/ Approved by legal
counsel.'' This document not only suggests coordination between the RNC
and ATR on TV ads, but also a sufficient investment of resources to
involve a written script and legal consultation. Since officials from
the RNC and ATR refused to be interviewed and
[[Page S12445]]
when subpoenaed refused to appear, we don't know whether any ad was
actually broadcast. Whether or not one was, this RNC-produced document
indicates coordination.
There's more. Documents indicate that RNC coordination efforts may
have extended to organizations other than ATR, and that the RNC may
have taken steps to pay for coordinated activities using not only its
own funds, but also funds from third parties which the RNC solicited
and directed. Here are some of the key documents.
The first is a memorandum dated October 17, 1996, marked
``confidential,'' from Jo-Anne Coe, RNC finance director, to Haley
Barbour, RNC chairman, Sanford McCallister, RNC general counsel, and
Curt Anderson, RNC political director. The memo discusses Coe's efforts
to forward certain sums of money to various tax exempt organizations,
including a $100,000 check from Carl Lindner to ATR, another $100,000
check from Mr. Lindner to the National Right to Life Committee, and
$950,000 from several sources to the American Defense Institute. The
memo poses questions about how certain checks should be handled and
requests quick action ``so I can put this project to bed.''
The project itself is not described in the memo; however, a second
document may shed light on that question. It is an October 21, 1996
memorandum from Jo-Anne Coe to Haley Barbour. This memo states:
As soon as we meet and hopefully come to some resolution on
the joint state mail project, I will forward these checks to
the three organizations. In the meantime, I am respectfully
withholding delivery of the checks until we have the
opportunity to discuss this matter.
Could the ``joint state mail project'' be the project referred to in
the October 17th memo from Coe to Barbour? Could it refer to ATR's $3.3
million direct mail-phone bank effort? Could it refer to mail efforts
by other organizations as well, since the memo cites three
organizations as being involved in the project? Is the fact that the
RNC Finance Director was ``respectfully withholding'' checks to these
three organizations evidence that the RNC was exercising control over
their performance in the mail project in exchange for funding? A
committee hearing could have tried to get answers to these questions.
The majority denied us that opportunity.
In the meantime, we must puzzle over two letters bearing the same
date, October 21, 1996, as the Coe memo to Barbour on the joint state
mail project. Both letters are from Jo-Anne Coe. The first letter is
addressed to Grover Norquist, president of ATR, and the second to David
O'Steen, the executive director of the National Right to Life
Committee. Each encloses a $100,000 check from Carl Lindner to the
organization, as described in the October 17 memo. Ms. Coe states in
both letters: ``Glad to be of some help. Keep up the good work.'' It
appears that the RNC may have directed its contributors to help the RNC
by making their checks payable to these tax exempt organizations but
then to keep control of the situation, have the contributors send the
checks to the RNC. The RNC then forwarded the checks to the
organizations, probably in support of the ``joint state mail project.''
Two other documents raise similar coordination questions. The first
was produced by the RNC and has the same ``confidential'' heading as
the October 17th memo from Jo-Anne Coe to top RNC officials, although
no author is named. This document discusses contributions to ATR, the
National Right to Life Committee, American Defense Institute, United
Seniors Association, the City of San Diego, and ``CCRI'' which is the
California ballot initiative on affirmative action. Each organization
is analyzed in terms of whether contributions to it would have to be
reported to the public and whether a contribution would be tax
deductible. The final document is a list of the same organizations
other than the ballot initiative. By each organization's name is a
large dollar figure. The figure for ATR is $6 million.
What do these figures mean? Does the $6 million for ATR mean that, in
addition to giving ATR $4.6 million directly, the RNC funneled another
$1.4 million to ATR in third-party contributions such as the $100,000
check from Carl Lindner? How were those funds used? Did the RNC
exercise some control over those funds? We'd like to ask.
Unfortunately, despite the repeated requests and efforts by the
minority to seek RNC and ATR testimony voluntarily and then by subpoena
and to have the few subpoenas that were issued enforced, the committee
never interviewed or deposed anyone connected with these documents.
Improper coordination between a national political party and tax
exempt organizations was a hot topic in this committee when the
political party involved was the Democratic Party. Some committee
members charged that President Clinton's participation in DNC issue ads
was improper or illegal, even though these ads were paid for by the
required soft money-hard money split. I repeat that, because this is a
very important point of distinction: the DNC issue ads were paid for by
the required soft money-hard money split. But in the Americans for Tax
Reform case, the facts suggest that the Republican Party sent millions
to ATR for issue advocacy in order to avoid using any hard money at all
for those efforts. To recall Mr. Barbour's words, they didn't have
enough hard dollars to match up.
The committee also held an entire day of hearings to take testimony
from Warren Meddoff about his asking for, and Harold Ickes' providing,
suggestions for contributions to tax exempt organizations. But the RNC
did much more than make suggestions. It actually collected checks,
contolled checks, and delivered checks to tax exempts which were allied
with it. The RNC may have directed millions of dollars to these
organizations for ``joint state mail projects,'' television ads and
other campaign activities.
Another unanswered question is how the RNC and ATR handled the $4.6
million on their own tax returns. Section 527 of the Tax Code suggests
that one or the other organization had to treat this sum as taxable
income. Did that happen? We don't know, and the committee has yet to
ask.
On April 9, 6 months ago, Mr. Norquist told the press that he would
``cheerfully testify before the committee.'' But he then refused to be
either deposed or interviewed. Even when he was finally subpoenaed for
a deposition, he refused to appear. ATR also refused to produce
documents in response to a committee document subpoena, claiming, ``ATR
has never engaged in electioneering of any sort. It has never advocated
the election or defeat of any candidate for any office at any time; it
has never run political advertising on any subject.''
Yet it is beyond dispute that Grover Norquist was a key figure in the
1996 elections. He was profiled in Elizabeth Drew's 1996 election
analysis, Whatever It Takes, for convening regular Wednesday meetings
in ATR offices attended by conservative activists, RNC officials and
GOP candidates. Drew describes him as ``one of the most influential
figures in Washington'' at the time. In Norquist's 1995 book, ``Rock
the House'', celebrating the Republican takeover of the House of
Representatives, prominent Republicans provided glowing quotations,
with Haley Barbour calling him ``a true insider,'' and Rush Limbaugh
calling him ``perhaps the most influential and important person you've
never heard of in the GOP today.''
Mr. Norquist meets the test that Chairman Thompson laid down for a
high caliber witness. And ATR's role in the 1996 elections--how it
spent the $4.6 million in RNC funds, how much money was directed to it
by the RNC from third parties and how those funds were spent, and the
window that ATR's actions opens onto RNC's coordination with tax exempt
groups--were unexplored topics in the Senate campaign finance
investigation.
And the ATR hearing is not the only hearing missing from the Senate
campaign finance investigation.
A second hearing we would have re-requested would have looked at the
Republican National Committee and Dole for President campaign. Out of
the more than 75 witnesses who testified before the committee over the
3 months of hearings, not one witness was called from the Republican
National Committee, other than with respect to the National Policy
Forum, or from the Dole for President campaign. What most people don't
know is that the committee never even interviewed
[[Page S12446]]
a single person from the Dole campaign, and request after request from
the minority for deposition subpoenas were refused. And although the
committee permitted two limited interviews of RNC officials, Haley
Barbour and Scott Reed, no questions were allowed to be asked
duringthose sessions on any topic other than the National Policy Forum
and no other person from the RNC was ever interviewed or deposed.
That means that the Senate Governmental Affairs Committee is
concluding its investigation into the 1996 elections without ever
asking a single question of the RNC or Dole campaign on such topics as
evasion of Federal campaign limits, improper coordination, misuse of
issue advertising, misuse of tax exempts, money laundering by a top
campaign official, or inadequate document production--all the topics
that the committee pursued vigorously with the Clinton campaign. This
see-no-evil, hear-no-evil, speak-no-evil approach to GOP conduct in the
1996 elections has not only seriously skewed the investigation, but it
has also left an regrettable stain on the bipartisan traditions of the
Governmental Affairs Committee.
A third hearing would have looked at Triad Management--a totally new
phenomenon in American electioneering and one which appears to have
violated a number of principles of Federal campaign law, from
contribution limits to FEC registration to full disclosure. Triad is a
private corporation that was set up by experienced GOP political
operatives to conduct multimillion dollar activities directly affecting
the 1996 elections. Among other activities, Triad created two tax
exempt organizations, collected millions of dollars in secret
contributions to them, and then used the tax exempts to air millions of
dollars worth of television ads affecting Federal campaigns. Triad also
conducted hundreds of ``political audits'' of GOP campaigns, paying
experienced campaign professionals to advise the campaigns on how to
improve their operations. Triad also may have arranged for individuals
who contributed the maximum allowable amount to GOP candidates to evade
Federal contribution limits by laundering additional contributions from
these individuals through political action committees.
Triad undertook all of these activities without ever registering with
the Federal Election Commission, or disclosing any contributions or
expenditures. Yet this wholesale abuse of Federal campaign law has not
been deemed by the majority to be worthy of a single hearing witness or
depositions.
Mr. President, the Governmental Affairs Committee's failure to
investigate the $4.6 million payment by the Republican Party to
Americans for Tax Reform, its failure to hold one day of hearings or
hear from one witness with respect to Triad Management, and its failure
to hold one day of hearings or call one witness from the RNC or Dole
campaign on these critical issues is simply unjustifiable. The
majority's commitment to allow Democrats 3 days of hearings in
September or October was not kept. As a result, important information
such as the ATR story was kept from the American public.
That is not just some process question about subpoenas and
depositions. That is a question about whether or not relevant testimony
within the scope of the jurisdiction of the committee should have been
obtained and should have been made public and made subject to
examination and cross-examination.
The Senate investigation was half an investigation. The other half
remains for the Treasury Department and Justice Department to
investigate.
Exhibit 1
John Grotta Co.
[Memorandum]
To: Audrey Mullen
From Cindy Finnegan
Re: Invoices/Payment Status
Date: October 29, 1996
----------------------------------------------------------------------------------------------------------------
Amount owed Amount paid Balance due
----------------------------------------------------------------------------------------------------------------
MAIL--JGCo.
10/18/96 10/21/96 ..............
ATR One......................................................... $490,808.11 $490,808.11 $0.00
10/22/96 10/23/96 ..............
ATRT Two........................................................ $459,736.27 $459,736.27 $0.00
10/22/96 10/25/96 ..............
ATR Three....................................................... $363,133.02 $468,000.00 $104,866.98
PHONES--JGCo.
10/7/96 10/9/96 ..............
Inbound......................................................... $41,500.00 $41,500.00 $0.00
10/24/96 10/25/96 ..............
ATR #1.......................................................... $1,104,000.00 $1,104,000.00 $0.00
10/28/96 10/31/96 ..............
ATR #2.......................................................... $712,643.70 $0.00 $712,643.70
Database--PBL
10/7/96 10/9/96 ..............
Database Acquisition............................................ $153,677.50 $153,677.50 $0.00
-----------------------------------------------
Total balance.............................................................................. $607,776.72
----------------------------------------------------------------------------------------------------------------
*Please Note: Does NOT Include Postage.
Video Audio
Picture of Labor Goons From Chapter II Washington Labor Bosses and
With Headline. Liberal Special Interests
Want To Buy Control of
Congress.
Washington Special Interest Support--With They Think Joe Blow Will
Picture. Vote Their Way.
Calendar Flips Back To 1993............... They Want To Return To
Higher Taxes For More
Wasteful Spending.
Chyron: Largest Tax Increase In History In Fact, They Were Behind
Over Chamber Shot. the Largest Tax Increase in
History
Picture of (Joe Blow) Says He's Different. Joe Blow Says He's
Different.
Stamp Wrong............................... Wrong!!
Place Info Under Picture of Democrat...... (Democrat Tax Record.10)
Graphic Build............................. for More Information Call
Americans for Tax Reform.
[Confidential, Memorandum of Oct. 17, 1996]
To: Haley Barbour, Sanford McCallister, Curt Anderson
From: Jo-Anne Coe
Subj: American Defense Institute
Copy of letter to Red McDaniel attached for your
information.
Today I have also sent $100,000 to National Right to Life
and $100,000 to Americans for Tax Reform--both from Carl
Lindner.
In addition, the following checks for ADI are en route to
me:
Name Amount
Jack Taylor....................................................$100,000
Max Fisher......................................................100,000
Don Rumsfeld.....................................................50,000
Pat Rutherford...................................................30,000
The $100,000 check from Lincy Foundation (Kirk Kerkorian)
for ADI is still MIA. With the $100,000 from Lincy, this will
bring the total for ADI to $510,000--plus the $500,000 Haley
obtained from Philip Morris. So the question is whether I ask
Kerkorian to stop payment on the lost check and send a
replacement check for the full amount of $100,000, or ask him
to send only $40,000 so that the grand total to ADI is only
$950,000. Please advise ASAP so I can put this project to
bed.
[Memorandum for Haley Barbour of Oct. 21, 1996]
From: Jo-Anne Coe
As soon as we meet and hopefully come to some resolution on
the joint state mail project, I will forward these checks to
the three organizations. In the meantime, I am respectfully
withholding delivery of the checks until we have the
opportunity to discuss this matter.
October 21, 1996.
Mr. Grover Norquist,
President, Americans for Tax Reform, Washington, DC.
Dear Grover: I am pleased to enclose a check in the amount
of $100,000 payable to Americans for Tax Reform from Mr. Carl
H. Lindner.
It will be appreciated if you will send a thank-you
acknowledgment to Carl at the address shown on this check.
Glad to be of some help. Keep up the good work.
Sincerely yours,
Mrs. Jo-Anne L. Coe.
Enclosure.
October 21, 1996.
Dr. David O'Steen,
Executive Director, National Right to Life Committee,
Washington, DC.
Dear David: I am pleased to enclose a check in the amount
of $100,000 for the National Right to Life Committee from Mr.
Carl Lindner of Cincinnati, Ohio.
It will be appreciated if you will sent a thank-you
acknowledgment to Carl at the address indicated on his check.
Glad to be of some help. Keep up the good work.
Sincerely yours,
Mrs. Jo-Anne L. Coe.
Enclosure.
1. Funding for CCRI may be corporate or non-corporate, and
there are no limits; however, contributions to CCRI itself or
state party accounts are reportable as contributions by the
initial donor. CA law requires donors who give in excess of
$10,000 to any CA political cause to file reports themselves.
Good practice is to try to avoid inflicting a new legal
reporting requirement on donors. A $3 million contribution or
expenditure, therefore, requires either lots of <$10,000 non-
FEC donors, use of FEC funds or large donors already or
willing to be subject to the CA reporting requirement.
2. ADI is a 501(c)(3), and contributions to it are not
political contributions by law. Contributions to ADI,
therefore, are not reportable and tax deductible.
3. Americans for Tax Relief (ATR) is a 501(c)(4).
Contributions to its fair elections campaign are non-
reportable, but they are not tax deductible.
4. United Seniors Association has both a 501(c)(3) and
(c)(4). Its fair elections campaign will be paid for by its
501(c)(4). Contributions to it are non-reportable, but they
are not tax deductible.
[[Page S12447]]
5. The National Right to Life Committee has both a
5601(c)(3) and (c)(4). Its get out the vote information drive
will be paid for by its 501(c)(4). Contributions will not be
reportable, but are not tax deductible.
6. The City of San Diego has a city account that accepts
contributions to help support a variety of civic activities,
including the convention host committee in raising their
shortfall. Contributions to the city account may or may not
be reported but are tax deductible.
American Defense Institute
1055 North Fairfax Street--Suite 200, $700,000
Alexandria, VA 22314, 703/519-700, 703/ (501c3)
519-8627 (fax), Contact: Red McDaniel. (tax-deductible)
United Seniors Association
12500 Fair Lakes Circle--Suite 125, $2.4 mil.
Fairfax, VA 22033, 703/803-6747, 703/803- (501c4)
6853 (fax), Contact: Sandra (Sandy) (not deductible)
Butler, President (Anita Benjamin, her
office manager).
National Right to Life Committee
419--7th Street, N.W.--Suite 500, $2 mil
Washington, D.C. 20004, 202/626-8820, (501c4)
202/737-9189 (fax), Contact: Dr. David (not deductible)
O'Steen, Exec. Dir. (Direct line: 626-
8814 or 626-8826).
Americans for Tax Reform
1320--18th Street--Suite 200, Washington, $6 mil
DC 20036, 202/785-0266, Contact: Grover (501c4)
Norquist, President. (not deductible)
City of San Diego........................ $4 mil
(501c3)
(tax-deductible)
The PRESIDING OFFICER. Senator Johnson is recognized under a previous
order.
____________________