The Buying of Washington

And then I want to welcome Peter Stone. He's written Heist: Superlobbyist Jack Abramoff, His Republican Allies, and the Buying of Washington. He's been covering lobbying and campaign finance issues since 1992, for the National Journal. He's here from Washington D.C., and he's going to discuss his book and then take some questions from you all, and then he'll be available to sign copies of his book, if you'd like. They're for purchase right up here next to the cash register. So if you would welcome, help me welcome, Peter Stone. Thank you. Thanks, everybody. It's nice to be in Berkeley. I would have one more person here, my sister, who's lived in Berkeley for about three decades and is a Chinese scholar, but she took off to Italy on some wild escapade with her boyfriend, so she's not here tonight. And an aunt of mine, I have other relatives in the bay area, longtime film critic for the San Francisco Chronicle. Retired now, named Judy Stone. But she came to hear me yesterday, so I can't-- I don't have any relatives here, so I'm depending on everybody here to ask very good questions, which I'm sure you will, and I imagine folks who turned out probably have followed this scandal a little bit. It's been making enormous news for almost 2 ½ years now. I've covered it since practically the beginning when the Washington Post did the first story on it in late February of 2004. In all the years I've covered lobby, which is sixteen, in Washington for National Journal and for another publication Legal Times before, there's never been a lobbying scandal quite like this. And it probably is one of the two or three biggest corruption scandals that Washington has seen involving Congress, both a member of Congress, we now have this month, Bob Ney has pleaded guilty to two felonies as part of the conspiracy that was led by Jack Abramoff, a longtime extremely effective GOP fund raiser, and powerful Republican lobbyist. One of the most powerful in Washington, whose career started in 1994 but took off like a rocket after the Republicans won control of Congress. He started lobbying in early 95. His career was aided significantly by two of his oldest friends, who he's known since the early 1980s, who have been leaders of the conservative movement in Washington and nationally, now for a couple of decades. One was Ralph Reed, the former head of the Christian Coalition, who gave up his Christian Coalition work in 1997 and went into the consulting business, and he immediately turned to Abramoff and in one of the immortal emails that you may have heard about that have made this story both astonishing and horrifying and humorous at the same time. Ralph Reed wrote to his old buddy Jack Abramoff, and I'm going to paraphrase a little of it, but "Now that I'm done with Christian Coalition, I'm counting on you for work and counting on you as I start humping for clients." Humping, humping, yeah. H, humping, yeah, for clients. Corporate work. This is a paraphrase of this email that's been widely publicized. Anyway, Reed was one of Abramoff's closest friends, he became involved with his Indian casino work, as you probably know. Abramoff was known for his work for several Indian casinos. He defrauded four Indian casinos, which is what he plead guilty to early this year. He plead guilty to fraud scheme basically involving kickbacks that he got from a covert partner who was a former aid to Tom DeLay, former spokesman for Tom DeLay, Michael Scanlon. Abramoff was hired by several tribes to do lobbying for them in Washington, and Abramoff said to these tribes, one in Texas outside of El Paso, one in Mississippi, one in Louisiana and another in Michigan, he told these tribes, you know, you can't get what you want in Washington unless you hire this other fellow. Extremely effective grass-roots lobbyist, PR wizard, Michael Scanlon, who had just left DeLay's office. And at Abramoff's behest, several tribes hired Michael Scanlon for six tribes paid him the astronomical sum of 66 million dollars over three years. These are the kind of fees that one normally associates with General Motors or General Electric. But a little consulting firm run by Michael Scanlon, which was touted by Jack Abramoff as the go-to guy you have to have him, to help you out generating phone calls, letters, grass roots support for you in Congress. So they hired Scanlon, they paid him 66 million dollars. What Abramoff did not tell the tribes, and was at the heart of the fraud, was that he had a secret business deal with Michael Scanlon, to split most of this money, kickbacks. They jocularly referred to it as "give me five," in, again, in their emails, and as the "give me five" scheme progressed, of the 66 million dollars, Abramoff and Scanlon pocketed 42 million. 21 million each. Both men plead guilty, Scanlon first, late November last year, and then Abramoff in early January. Which set off a domino effect this year of plea bargains. And incredible number. We've now got eight people who have been convicted in the scandal, lobbying associates of Abramoff, the plea was to fraud, the plea was also conspiracy to bribe public officials. And the public officials are former top aids in Congress, two were top aids to Tom DeLay, Scanlon and a fellow named Tony Rudy, who was his deputy chief of staff, Rudy went on to be a lobbying associate for Abramoff. Former top aid to Bob Ney, who plead guilty, as I said, a few weeks ago, another lobbying associate of Jack Abramoff's who joined him, and they got Bob Ney to do a lot of things for them. Bob Ney put statements in the Congressional Record to help them. Bob Ney promised to help one of the Indian tribes re-open their casino. This was one of the biggest frauds of all, because Abramoff, in early 2002, had just spent six months closing down an Indian casino in Texas, helping to close down an Indian casino, which he convinced another tribe he was working for, in Louisiana, threatened their profits. So he worked to close down the Tigua casino, outside of El Paso, and then, within days, literally days, 24, 48 hours after it was closed, he was on the phone with the Tiguas, saying, "Hey, you've got a problem. I think it's outrageous what they did to your casino. This is just intolerable. I think we can help you get it re-opened." He was invited down to El Paso, he wrote Scanlon, "Fire up the jets baby, we're going to El Paso," they flew down in their private jet, and within a couple weeks they'd signed a contract with the Tiguas for 4 million dollars, to help this poor Indian tribe. I visited the Tiguas, I visited the Louisiana tribe, I visited the Michigan tribe, these casinos are, while we may associate a lot of casinos in this country with corruption and addiction, and I'm not going to say that Indian casinos don't have some problems, but many of these Indian casinos became economic mainstays for these tribes. These tribes started opening them in the early 90s, after Congress passed a law that allowed Indian gaming, and in the case of the Tiguas, it was generating 60 million dollars a year. The unemployment level of the tribe had gone from about 50% to zero, while the casino was going. And a lot of the money was put, interestingly, into health, education, and welfare programs. I saw a fantastic health facility they built for 20 million dollars with casino profits. Anyway, the Tigua story is outrageous because it involved a kind of double dealing here, shutting them down first to help their longtime client in Louisiana, and then going to them within days and saying, Let us help you re-open it. They went to Bob Ney, one of their best friends in Congress, and they told Ney, they said, "Would you be able to put a provision on an election reform bill?" Ney said, Okay, and Ney apparently was interested in going for some golf in Scotland too. Abramoff was famous for taking golf junkets to Scotland, he'd taken one with DeLay in 2000, DeLay being his closest ally in Congress, who I should say is still under investigation in this scam, even though he's left Congress, but Bob Ney wanted to go and St. Andrews, one of the most lavish trips in the golf world, and one of the most expensive, so they planned a trip. To finance these trips they typically went to their clients. So they went to the Tiguas and said, "Can you put up $50,000?" The Tiguas had just given $300,000 in campaign contributions, mostly to Republicans that Abramoff had asked for a couple weeks before. So-- maybe because they were financially strapped, maybe because they were a little cynical, they abstained from the contribution, but Abramoff kept pressing them finally they went to another tribe in Texas. The Tiguas approached a fellow tribe, who also could have benefited from this legislation that he was going to supposedly introduce for them. Never happened. But another tribe kicked in $50,000 to a private charity, Abramoff didn't do things openly much of the time, he set up conduit shelves, charities, non-profits run by friends, that became laundromats of sorts, pass-throughs, conduits, so his own private charity, called the Capital Athletic Foundation, of all things, which was on its website supposed to be giving $5,000, $10,000 grants to the boys clubs and the YMCA. I'm not making this up. It sounds zany and it is zany, but this is how this guy operated. And I've said in my book, and I've said in a number of my talks, that some of this stuff is so crazy, it reads, it sounds like, it could have been a script that Mel Brooks might have written for a movie like The Producers, if you've seen The Producers. It's totally wacky, the frauds and the scams were as wild as they come. Anyway, the junket took place in 2002, financed by another Indian tribe, and another gambling company, and a few other folks. The legislation never happened. It was one of the favors that Ney acknowledged he did for Abramoff. In his plea Ney said, basically, I sold my office to Jack Abramoff, and a foreign businessman who is unrelated to this scandal. Ney got tens of thousands of dollars, not only in the golf trip to Scotland, but in restaurant meals in Washington. Abramoff was not your typical lobbyist, he was an extraordinary entrepreneur, hustler, he had his own restaurant that he opened in 2002, and it became a watering hole, fund raising site in Washington that Republicans flocked to, some Democrats, but mostly Republicans, they promised liberal servings for Conservatives at the restaurant, something like that, I'm paraphrasing this, but Ney got thousands of dollars of free meals, the restaurant supposedly had accomplished several other members of Congress, did very well there. DeLay allegedly, and maybe a member from California I should mention named John Doolittle, who is one of four members of Congress, Doolittle from Sacramento, is under scrutiny, he has not been charged with anything, Doolittle has said he's done nothing wrong, but Doolittle did receive tens of thousands of dollars in contributions from Abramoff and his tribe of clients, and form a very unusual foreign client in the part of Jack's infamous resume, was his representation of a US Territory in the Pacific called the Commonwealth of the Northern Marianas, it's a territory that is famous, or infamous, again, for its garment industry, where it employs immigrant workers, mostly from China and also in Asia, women who are paid close to sweatshop wages, real sweatshop wages, they have an exemption from the US minimum wage laws. And Abramoff was hired to preserve this exemption. And exemptions from US labor laws. He did it for almost a decade, his primary backer in Congress was Tom DeLay on this. Doolittle was also a supporter on this. Doolittle, besides getting campaign contributions, had another way in which Abramoff helped him, and that was-- may have helped him, probably helped him Abramoff hired Doolittle's wife for 66,000 dollars, supposedly to help organize a fundraiser for his capital athletic foundations, come back here too. The fundraiser never happened, but she was paid $66,000 nonetheless. I think Doolittle is under intense scrutiny, and his campaign, as you may know, has suffered as a result of that. Senator Conrad Burns of Montana is another Abramoff friend who got $150,000 in contributions, more than anybody in Congress. Burns' campaign has been very hard-hit by this. Richard Pombo, another Californian, is not, as far as I know, under investigation in the conspiracy case, but Pombo, too, was an ally of Abramoff's, second-tier, not quite up there with the big four: Ney, Doolittle, Burns and DeLay. But Pombo was an ally and he too was somebody whose campaign has been fairly hard-hit by this whole scandal. Of course, Pombo's also been battered by environmental groups, who seem to have a few gripes against him. These are some of the highlights of the scandal. It is an incredible story. It's not going to end with the election. These other investigations are under way. There's at least one former Bush Administration official, the number two in the interior department, Steven Griles, who was an energy lobbyist before the Bush administration and he left about a year ago, year and a half ago, went back into lobbying. Once again, an energy lobbyist. He is being looked at in the scandal and while Grover Norquist, one of Abramoff's oldest friends, along with Ralph Reed, Grover Norquist being the leader of the powerful Americans for Tax Reform, who benefited from Abramoff's clients, who allowed his organization to be used as a conduit again to funnel some of the funds to Ralph Reed, the former Christian Coalition leader who did not want publicity. He had to have his monies. The 6 million dollars he was paid by Abramoff's clients sent through conduits and shells, Norquist group is maybe facing some scrutiny, tax issues, not criminal issues. Reed, as far as we know, is not facing criminal issues but his reputation took such a beating in this scandal that as you probably know, his race, his first race ever for elected office this year, in the small position of Lt. Governor of Georgia, which he was considered an absolute shoo-in for late last year when he announced the race, Reed, who'd been a top advisor to the Bush campaign in 2004, helped run strategy for five southern states, and was a trusted confidant of Carl Rove, former head of the GOP in Georgia. He was seen as all but, you know, in office. And then the scandal news started to pick up. More and more details of how he received his money funneled through conduits because he didn't want his reputation as an opponent of gambling stained by the fact that he'd worked for Abramoff's gambling clients, his niche, his work was mainly to help Abramoff protect his gambling clients by knocking off other tribes and other gambling entities nearby. That might have posed threats to Abramoff's clients. So Ralph Reed took his Rolodex, his old friends from the Christian Coalition days, called them up, said "Hey, we have a good cause. How would you like to help rally social conservatives, religious conservatives, against that casino down the road there?" Most of these people did not know, but Reed surely did, that the reason they were working so hard to knock off these casinos was because they posed a threat to Abramoff's client. These are extraordinary scams, it's an extraordinary corruption scandal, it's going to be going on for months more, and I'm glad you all are interested in it, and I'd be glad to answer any questions that you have.