[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.

                          ____________________