Panel Releases 'Dueling' Reports, Remaining Partisan To The End

By Jackie Koszczuk, CQ Staff Writer

With the release of dueling majority and minority reports, the partisanship that has dogged the Senate Governmental Affairs Committee's investigation into campaign finance abuses in the 1996 elections from the beginning persisted right up to the bitter end.

Republican and Democratic senators on March 5 issued separate, 1,000-plus-page reports drawing starkly different conclusions from the yearlong investigation. The split greatly reduced the chances that either document will have much impact on the debate over changing the campaign finance system.

Committee Democrats refused to sign off on the majority report, which blamed President Clinton, his allies and the Democratic National Committee (DNC) for widespread fundraising abuses that occurred in 1996. The report was approved and sent to the Senate on a strictly party-line vote, 8-7. The minority issued its own assessment, blaming both parties for exploiting loopholes in campaign finance laws.

Chairman Fred Thompson, R-Tenn., and ranking member John Glenn, D-Ohio, lamented their inability to work together to write a single report, which would have had more credibility and potentially more impact on public opinion. Thompson said that as a result, the committee must put two reports before the public and "let them be judged."

Said Glenn: "If we had been together on this and had come out with a good, strong report, we could have had impact. We could have maybe broken a filibuster."

The Senate on Feb. 26 failed, 51-48, to end a GOP-led filibuster against bipartisan campaign finance legislation, most likely killing the effort for the year. Both Thompson and Glenn supported the measure. (Weekly Report, p. 467)

Despite Thompson's views, the majority report makes no recommendations for legislative fixes to the current fundraising system. Though Thompson is an advocate of system-wide reform, he is among only a handful of Senate Republicans who hold that view.

Instead, the majority report's key recommendation is that an independent counsel should step in to pick up where the committee left off and conduct a full-blown criminal probe, including looking into possible instances of perjury by committee witnesses.

The Democratic report condemns questionable practices on both sides, including access-peddling, acceptance of foreign contributions and the use of outside groups and nonprofit organizations to wage what in effect were attack campaigns against political enemies.

"Both the Democratic and Republican parties raised vast amounts of soft money from corporate, union and individual donors and then used loopholes in the law to spend the money helping specific candidates," the minority report says.

Majority Recommendations

Among the majority's recommendations are:

Most of the other sections of the report had already been widely reported by the media.

They lay out in detail the Republicans' view that Clinton and his aides improperly used the White House for fundraising, with coffees and overnight stays in the Lincoln Bedroom. They also charge Democrats with circumventing federal fundraising limits by misusing "soft money," so-called because unlike "hard money," it can be raised in unlimited amounts as long as it is used only for party-building activities.

The majority report says the money was improperly used to finance a multimillion-dollar television advertising campaign that the president personally oversaw. In a frenetic drive to continue to raise money, the report says, the DNC abandoned its vetting process for donations, allowing large, illegal contributions from foreigners to flow unchecked into party coffers.

The majority report describes at length just one instance of possible Republican wrongdoing -- allegations that former Republican National Committee (RNC) Chairman Haley Barbour arranged for a Hong Kong businessman to guarantee a $2.1 million loan to a GOP think tank, which then transferred the money to the RNC just before the 1994 elections. At the time it made the loan guarantee, the firm, owned by businessman Ambrous Tung Young, was based in Florida but had no assets and posted little business activity. The money was supplied by Young's company in Hong Kong. The think tank, called the National Policy Forum, later defaulted on the loan.

The Republicans conclude that Barbour did nothing wrong. The loan guarantee was legal, they say, because it went to a nonprofit organization, not a political committee. Although the think tank transferred the money to the RNC just before the pivotal 1994 elections, when the GOP took control of both houses of Congress, the report concludes that transfer was nothing more than a payback to the RNC for an earlier loan.

"The transaction was thus in all respects legal and proper," the report says.

Apparent Contradictions

The partisan tilt to the majority report creates apparent contradictions. In some cases, fundraising activities by Democrats that the majority finds objectionable are deemed appropriate when practiced by Republicans.

For example, Clinton is roundly criticized for rewarding big contributors -- some of them foreigners -- with access to events that brought them in close contact with the president. But the Republican senators find nothing amiss about Barbour arranging a private meeting for Young, who is not a U.S. citizen, with House Speaker Newt Gingrich, R-Ga., and then-Senate Majority Leader Bob Dole, R-Kan.

The report portrays the meeting as innocent, saying, "There was no discussion relating to any legislation, government program or government contract of any kind." But in the many passages dealing with Clinton's meetings, the very presence of the president in intimate settings with contributors is treated as suspect, without reference in many cases to whether legislation or government programs were discussed.

In their report, the Democrats assert that both parties had a hand in the excesses of 1996.

Defending Clinton and the DNC, they say that only a fraction of the funds raised by Democrats came from foreign sources, and they note that the committee was never able to find definitive evidence of Thompson's central premise -- that the communist Chinese government executed a plan to illegally influence the presidential election and American foreign policy.

"The Committee obtained no evidence that funds from a foreign government influenced the outcome of any 1996 election, altered U.S. domestic or foreign policy or damaged our national security," the Democratic report says.

But the minority also criticizes the DNC for failing to vigilantly supervise the fundraising by Huang, who procured many of the illegal foreign donations that later were returned. It faulted the party for not taking steps to ensure that contributions were lawful.

The report takes the White House to task for giving access to donors such as Roger Tamraz, who gave $300,000 and used his visits with the president to promote an oil pipeline between the Caspian and Mediterranean seas. Tamraz in the end was unable to alter administration policy opposing the deal.

The report calls Tamraz "one of the most egregious examples of access being provided in exchange for political contributions."

The minority also cites several examples of alleged Republican abuses.

For example, it notes that the RNC gave the conservative Americans for Tax Reform $4.6 million to spend on direct mail and phone operations to counter anti-Republican ads on the Medicare overhaul issue in 1996. The arrangement enabled the RNC to, in effect, spend soft money helping GOP candidates.

One of the most serious cases cited by the Democrats involved a firm called Triad Management Services. The for-profit company channeled millions of dollars from its corporate backers to two tax-exempt groups that Triad established "for the sole purpose of running attack ads against Democratic candidates under the guise of 'issue advocacy,' " the report says.

The scheme allowed Triad's well-heeled backers to influence campaigns while avoiding disclosure rules and contribution limits, the minority report concludes.

The majority report acknowledges the lack of proof of Chinese influence in the election. While saying it found "strong circumstantial evidence" that China undertook such a plot, the Republicans concede that they could not say conclusively whether the Chinese government funded or directed illegal contributions to the president or members of Congress.

Several Clinton donors, the report notes, had suspicious ties to the Chinese government. A prime example was Ted Sioeng, a foreign national who gave $400,000 to the DNC, half of it from overseas accounts. Sioeng, the majority notes, was an owner of Mansion House Securities, which intelligence information showed to be owned in part by the Chinese government.

The majority report also acknowledges that another major question that grew out of the election was left unanswered: whether a big increase in "issue advocacy" advertising by nonprofit groups was an improper attempt to influence the outcome of elections, and whether the groups' "independent expenditures" were truly independent of the campaigns they benefited.

Committee members complained that the deadline Senate leaders imposed on the investigation encouraged groups to evade the panel's subpoenas, knowing there was too little time for the committee to follow up with contempt of Congress citations.

New Indictments

Thompson emphasized that a string of recent indictments is beginning to vindicate the committee's work.

The Justice Department announced March 5 that Democratic fundraiser Johnnie Chung had entered a plea agreement to cooperate with the department's probe of the 1996 election. Chung was charged with channeling illegal donations to Clinton by using friends and employees of his California-based office machine company as straw donors.

Chung and his company gave $366,000 to the DNC, most of which was later returned. He used the White House to entertain his foreign clients, once bringing a group of them into the Oval Office to watch Clinton deliver his weekly radio address.

Also on March 5, the department said it had arrested Yogesh Gandhi, suspected of funneling $325,000 in foreign contributions to Democrats, on unrelated fraud charges as he prepared to leave the country for his home in India.

Clinton friend Trie was arrested on Feb. 3 on 15 counts of funneling illegal foreign funds to the president's re-election effort. Democratic fundraiser Maria Hsia also is under indictment in a straw-donor scam.

March 7, 1998

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