[House Report 104-401]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 148
104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 1st Session                                                    104-401
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INQUIRY INTO VARIOUS COMPLAINTS FILED AGAINST REPRESENTATIVE NEWT GINGRICH

                                _______


 December 12, 1995.--Referred to the House Calendar and ordered to be 
                                printed

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    Mrs. Johnson of Connecticut, from the Committee on Standards of 
               Official Conduct, submitted the following

                              R E P O R T

    The Committee began meeting on the complaint filed by Mr. 
Ben Jones in the last Congress on February 9, 1995, shortly 
after the Committee was constituted for the 104th Congress. 
Since February 9 1995, the Committee has held in excess of 
fifty meetings on this and the succeeding complaints, either in 
Executive Session of Members or to depose witnesses. The 
Committee took sworn testimony from over twenty witnesses in 
relation to these complaints, and all witnesses were afforded 
the opportunity to have counsel present during their 
depositions.
    The complaints fall into different groups. There are some 
that involve no dispute as to the facts and required only that 
the Committee make a judgment, for example, as to the 
appropriateness of special order material. Another group of 
complaints required the examination of documents or the 
deposition of witnesses, but by preserving the right of 
Committee members to directly evaluate the facts, a solid 
foundation was established for Members to make the 
determination as to the disposition of these charges. Other 
complaints involved fairly complex issues and would require a 
review of a significant number of documents, knowledge of tax 
law, and a major investment of time for the members of this 
committee.
    On December 6, 1995, the Committee on Standards of Official 
Conduct met in executive session and took the following actions 
by unanimous vote in regard to six complaints against 
Representative Newt Gingrich.

                        Discussion of Complaints

    The Jones complaint filed on September 12, 1994, contained 
allegations regarding Representative Gingrich's course 
``Renewing American Civilization.'' Mr. Jones alleged that 
Representative Gingrich used official resources in preparing 
for his course. These allegations were examined by the 
Committee during the 103rd Congress, Representative Gingrich 
made restitution to the U.S. Treasury, and the Committee 
recommended no further action.
    Mr. Jones also alleged a conflict of interest in a $25,000 
contribution by Mr. Richard Berman to the Kennesaw State 
College Foundation. Mr. Berman made this contribution after 
testifying before a House subcommittee. Telephone interviews by 
staff and documentary evidence reviewed by the Committee failed 
to support the allegation of a quid pro quo or other conflict 
of interest. Therefore, this allegation was dismissed.
    Finally, Mr. Jones alleged that Representative Gingrich 
misused entities organized under Sec. 501(c)(3) of title 26 of 
the United States Code in support of his course entitled 
``Renewing American Civilization.'' The Committee voted a 
Preliminary Inquiry as to whether Representative Gingrich's 
activities in relation to the course ``Renewing American 
Civilization'' were in violation of Sec. 501(c)(3) of title 26, 
United States Code, or whether any Sec. 501(c)(3) entity, with 
respect to the course, violated its status with his knowledge 
and approval. The Committee agreed to hire special counsel to 
assist the Investigative Subcommittee that will conduct the 
preliminary inquiry.
    The Jones complaint filed on January 26, 1995, contained a 
number of separate allegations and repeated three charges from 
his first complaint, filed on September 12, 1994.
    Mr. Jones alleged that Representative Gingrich's book 
contract with HarperCollins violated the principles set forth 
in House Select Committee on Ethics Advisory Opinion No. 13, 
(October 1978), in which it is noted that being a Member of 
Congress is a full-time job. The Committee has never ruled that 
writing a book in itself violates the responsibilities of being 
a Member; in fact, the Committee has approved numerous book 
contracts over the past few years. The Committee, therefore, 
dismissed the allegations that writing a book is inconsistent 
with being a full-time Member of Congress.
    Mr. Jones also alleged that the amount of money 
Representative Gingrich is expected to earn abuses the 
copyright royalties exception to the outside earned income 
limit. There currently is no limit on the amount of copyright 
royalties a Member may receive and, therefore, the Committee 
dismissed that allegation in the complaint.
    Mr. Jones further alleged that Representative Gingrich 
violated the Code of Ethics for Government Service by accepting 
favors or benefits from Mr. Rupert Murdoch in the form of a 
book contract with his company, HarperCollins. Mr. Jones also 
alleged that at the meeting with Mr. Murdoch, an attempt was 
made to influence Representative Gingrich to aid the Fox 
Network in its dispute with NBC by providing him with a 
lucrative book contract.
    The Committee examined fifteen witnesses under oath 
including every participant in the November 28, 1994 meeting. 
The Committee found no evidence that either the book or the 
negotiations were mentioned at the meeting between 
Representative Gingrich and Mr. Murdoch. Further, the Committee 
concluded that the November 28, 1994, meeting was a courtesy 
visit of a routine nature, with the pending NBC complaint 
before the Federal Communications Commission being mentioned 
only briefly in passing. In view of this testimony, the 
Committee concluded this allegation did not merit further 
inquiry and it was dismissed.
    Mr. Jones also alleged that the auction process was 
improper. The Committee examined numerous witnesses under oath 
who were involved in the auction process, including 
representatives of each of the major publishing houses that bid 
on the Gingrich book. The Committee also deposed individuals 
from HarperCollins who were involved in either the auction or 
the contract negotiations. The auction process and the contract 
were examined by the Committee and by an outside expert not 
associated with Representative Gingrich's book or the auction. 
The auction process which initially resulted in a $4.5 million 
advance, later renegotiated to a one dollar advance, was found 
to be in compliance with industry practices.
    The Committee found that Representative Gingrich did not 
violate the House Rule governing book contracts or royalty 
income. While the original advance greatly exceeded the 
financial bounds of any book contract contemplated at the time 
the current rules were drafted, the Committee concluded that 
Representative Gingrich's book contract was in technical 
compliance with the ``usual and customary'' standard of House 
rules regarding royalty income. However, the Committee strongly 
questions the appropriateness of what some could describe as an 
attempt by Representative Gingrich to capitalize on his office.
    The Committee believes that the existing House rule must be 
changed to clearly restrict the income a Member may derive from 
writing books. As recent events demonstrate, existing rules 
permit a Member to reap significant and immediate financial 
benefits appearing to be based primarily on his or her 
position. At a minimum, this creates the impression of 
exploiting one's office for personal gain. Such a perception is 
especially troubling when it pertains to the office of the 
Speaker of the House, a constitutional office requiring the 
highest standards of ethical behavior, but it is also a factor 
to be strongly considered by each Member of Congress.
    Therefore, the Committee recommends that House Rule 47 be 
changed to subject royalty income derived from books written 
while one is a Member to the same limits as other sources of 
outside earned income. A copy of the proposed rule is attached.
    Mr. Jones further alleged that Representative Gingrich 
asked chief executive officers at the Business Roundtable to 
provide volunteers to help him downsize government and that he 
asked that group and the Managed Futures Association to buy the 
tapes of his course.
    The Committee found no evidence of any contribution of 
goods or services in support of congressional operations, and 
so concluded there had been no violation of Rule 45. This count 
of the Jones complaint merited no further inquiry and it was 
dismissed.
    Further, the Committee found that no House rule or 
regulation is violated when a Member, without using any 
official resources, mentions the availability of a product such 
as a videotape collection, particularly when the beneficiary of 
any sales is an organization recognized under Sec. 170(c) of 
the Internal Revenue Code. In fact, the Committee's memorandum 
of October 9, 1990 allows such solicitations by Members, 
officers, and employees without any requirement for prior 
approval by this Committee. This count of the Jones complaint 
merited no further inquiry and it was dismissed.
    It was further alleged that Representative Gingrich 
improperly intervened with Executive Branch officials on behalf 
of Direct Access Diagnostics, a contributor to the Progress and 
Freedom Foundation. The Committee took sworn testimony from 
four witnesses and reviewed written submissions provided by 
Representative Gingrich, the Foundation, and Johnson & Johnson, 
the corporate parent company of Direct Access Diagnostics.
    The Committee found no credible evidence of any improper 
linkage between the actions of Representative Gingrich and the 
contributions to the Progress and Freedom Foundation, and, 
therefore, determined that the matter did not merit further 
inquiry and it was dismissed.
    The Miller complaint alleged that the Speaker improperly 
used the services of Mr. Gaylord in the operations of his 
office in violation of House Rule 45, which prohibits the use 
of private resources for official purposes. Mr. Gaylord's 
alleged activities included attending leadership meetings, 
interviewing prospective employees, and making salary 
recommendations in the transition period during which 
Representative Gingrich was reorganizing his office to assume 
the responsibility of Speaker.
    The Committee found that the utilization of Mr. Gaylord to 
interview employees during the transition, a task that is 
properly associated with the official responsibilities of House 
Members and employees, is inappropriate. The routine presence 
of Mr. Gaylord in congressional offices creates the appearance 
of the improper commingling of political and official resources 
and is inappropriate. The Committee concluded that these 
actions taken together violate House Rule 45. The Committee has 
so notified Representative Gingrich and will take no further 
action.
    The complaint brought by Representatives Schroeder, 
McKinney and Johnston alleged that the receipt of free cable 
time by Representative Gingrich for the broadcasting of his 
lectures constituted a gift and was an improper solicitation 
and/or acceptance of something of value in violation of House 
rules and applicable standards.
    Based on sworn testimony before the Committee, a review of 
documentary evidence, and interviews by Committee staff, the 
Committee found that the broadcasting of the lectures did not 
constitute either a gift or a favor to Representative Gingrich 
within the meaning of House rules or applicable standards, nor 
was there an improper solicitation. The receipt of an 
incidental benefit of publicity does not constitute a gift or 
an improper benefit as it does not meet the test of something 
of value required by Sec. 7353 of title 5 of the U.S. Code. The 
Committee found further that there was no evidence of 
Representative Gingrich's involvement in the solicitation of 
free cable time; that he was not compensated for the 
broadcasting of the lectures; and that there was nothing 
special or unusual about the broadcasting arrangement. The 
Committee concluded this matter merited no further inquiry and 
it was dismissed.
    Representative Bonior's first complaint alleged, in 
substance, that between February 2, 1993, and April 24, 1994, 
Representative Gingrich improperly used official resources for 
unofficial purposes by speaking about his course, Renewing 
American Civilization, and by giving out a 1-800 number during 
his Special Orders and Extension of Remarks.
    Representative Gingrich had informed the Committee of his 
intention to discuss the subject matter of the course on the 
House Floor, and the Committee confirmed it was within his 
right to do so. However, the Committee regards the mentioning 
of the 1-800 number for the purpose of selling audio or video 
tapes of the college course to be an improper use of the House 
Floor. The Committee's standing policy on solicitation by 
Members was outlined in an August 3, 1993, letter to 
Representative Gingrich regarding fundraising for the course at 
Kennesaw State College. In that letter, the Committee's rule 
covering Member fundraising was restated: ``Members may solicit 
funds on behalf of charitable organizations qualified under 
Sec. 170(c) of the Internal Revenue Code, provided that no 
official resources are used, no official endorsement is 
implied, and no direct personal benefit results.'' By referring 
to the 1-800 number, through which tapes are offered for sale, 
Representative Gingrich used official resources in a 
solicitation for a Sec. 170(c) organization. This violates, as 
well, the proscription noted in the House Ethics Manual against 
inserting commercial advertising in the Congressional Record.
    The Committee thus found a misuse of a Member's prerogative 
to speak in the House Floor in the one instance in which the 1-
800 number established to sell tapes was mentioned. The 
Committee has so notified Representative Gingrich and will 
taken no further action. The remaining four allegations were 
dismissed because no solicitation was involved.
    On May 8, 1995, Representative Bonior alleged that 
Representative Gingrich had violated House Rules by using 
official resources to publicize a GOPAC-sponsored activity, the 
American Opportunities Workshop, by the use of twelve Special 
Orders between January 23, 1990, and June 11, 1990. During 
these Special Orders, there were references to a 1-800 number 
through which tapes of the televised program could be obtained. 
Of special significance to the Committee was that the workshop 
being discussed was sponsored by a partisan organization. The 
respondent's assertions in the Special Orders that the endeavor 
was nonpartisan did not overcome the perception created by its 
being organized and run by a partisan political action 
committee. The Committee found that this use of Special Orders 
violated House Rules by using the official resource of the 
House Floor for political purposes. The Committee has so 
notified Representative Gingrich and will take no further 
action.
    While the Committee chose to take no further action, the 
Committee will ask that the interpretations of House Rules be 
clarified to better guide Members on the appropriate use of 
Special Orders.

                               Conclusion

    The Committee has taken final action on five of the six 
pending complaints, citing violations or dismissing allegations 
as appropriate. The Committee has voted a Preliminary Inquiry 
in regard to certain portions of the Jones complaint filed on 
September 12, 1994, and will hire special counsel to assist in 
this inquiry. The Committee is recommending a change in House 
rules regarding the treatment of royalty income.
    The Committee acknowledges that a complaint has been filed 
alleging that Mr. Donald Jones volunteered his services in the 
office of Representative Gingrich in violation of Rule 45 of 
the Rules of the House of Representatives. The Committee has 
asked Representative Gingrich to respond to this complaint and 
will take such action as may be appropriate when that response 
is received.

                   Resolution of Preliminary Inquiry

    Whereas, complaints have been filed with the Committee 
alleging improper conduct by Representative Newt Gingrich in 
connection with a college course and certain foundations 
qualified under section 501(c)(3) of Title 26 of the United 
States Code; and
    Whereas, the Committee determines that these allegations 
are within the jurisdiction of the Committee and merit further 
inquiry: Now, therefore, be it
    Resolved, That the Committee conduct a Preliminary Inquiry, 
in accordance with Rule 17 of the Rules of the Committee, to 
determine if there is reason to believe that Representative 
Gingrich's activities in relation to the college course 
``Renewing American Civilization'' were in violation of section 
501(c)(3) or whether any foundation qualified under section 
501(c)(3), with respect to the course, violated its status with 
the knowledge and approval of Representative Gingrich; and be 
it further
    Resolved, That the Chair and Ranking Democratic Member 
appoint four Members of the Committee to serve as Members of 
the Investigative Subcommittee that will conduct the 
Preliminary Inquiry; and be it further
    Resolved, That the Committee appoint a Special Counsel to 
assist the subcommittee.

                      limitation on royalty income

H. Res. ________

SECTION 1. AMENDMENT TO HOUSE RULES.

    (a) Clause 3(e) of rule XLVII of the Rules of the House of 
Representatives is amended to read as follows:
    (e) The term ``outside earned income'' means, with respect 
to a Member, officer, or employee, wages, salaries, fees, and 
copyright royalties earned while a Member, officer or employee 
of the House, and other amounts received or to be received as 
compensation for personal services actually rendered but does 
not include--
          (1) the salary of such individual as a Member, 
        officer, or employee;
          (2) any compensation derived by such individual for 
        personal services actually rendered prior to the 
        effective date of this rule or becoming such a Member, 
        officer or employee, whichever occurs later;
          (3) any amount paid by, or on behalf of, a Member, 
        officer or employee, to a tax-qualified pension, 
        profit-sharing, or stock bonus plan and received by 
        such individual from such a plan;
          (4) in the case of a Member, officer, or employee 
        engaged in a trade or business in which the individual 
        or his family holds a controlling interest and in which 
        both personal services and capital are income-producing 
        factors, any amount received by such individual so long 
        as the personal services actually rendered by the 
        individual in the trade or business do not generate a 
        significant amount of income; and
          (5) copyright royalties for works published before 
        becoming a Member, officer, or employee of the House.
    (b) Clause 3 of rule XLVII of the Rules of the House of 
Representatives is further amended by adding at the end the 
following new paragraphs:
    (g) A Member, officer, or employee of the House may not--
          (1) receive any copyright royalties pursuant to a 
        contract entered into after becoming a Member, officer, 
        or employee--
                  (A) unless the royalty is received from an 
                established publisher pursuant to usual and 
                customary contractual terms; and
                  (B) without the prior approval of the 
                contract by the Committee on Standards of 
                Official Conduct; or
          (2) receive any advance payment for any such work. 
        However, this rule does not prohibit literary agents, 
        research staff, and other persons working on behalf of 
        the Member, officer, or employee, from receiving 
        advance payments directly from the publisher.
    (h) The Committee on Standards of Official Conduct, subject 
to such exceptions as it deems appropriate, shall not approve 
any contract which permits the deferral of royalty payments 
beyond the year in which earned.

SEC. 2. EFFECTIVE DATE.

    The amendments made by this resolution shall apply to 
copyright royalties earned by a Member, officer, or employee of 
the House of Representatives after December 31, 1995.

                                
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