|Tom DeLay- Corporate Whore|
The King of Influence Peddling
In 1994 DeLay started his own political action committee, called Americans for a Republican Majority, and a "corporate alliance" called Project Relief, composed mostly of lobbyists who wanted relief from government regulations. According to the Federal Election Commission, DeLay received more contributions from PACs than any Republican other than Newt Gingrich in the 1996 campaign. The money lobbyists give to Armpac is in turn distributed to Republican candidates, who then owe DeLay both votes and loyalty. His contributions to the famous class of Republican freshmen in 1994 enabled him to win his race for majority whip by three votes.
His real constituency is the lobbying corps, and the sleazy smell that rises from their vigorous cooperation is another reason for DeLay's vulnerability. His motto is blunt: "If you want to play in our revolution, you have to live by our rules." DeLay's rules are upfront, apparent to anyone who cares to look. On his desk he keeps a list of the 400 largest political action committees and the amounts and percentages they've contributed to Republicans and Democrats. Those committees that have given heavily to the GOP are labeled "friendly," the others "unfriendly." He also pressures corporations and trade groups to fire Democrats and hire Republicans as their lobbyists. Says DeLay, "We're just following the adage of punish your enemies and reward your friends. We don't like to deal with people who are trying to kill the revolution. We know who they are. The word is out." His fund-raising letters to lobbyists are blunt enough to help earn him the nickname the Hammer.
In late 1995 The Washington Post reported on DeLay's "friendly" and "unfriendly" lists, and soon after, Ralph Nader's Congressional Accountability Project began an investigation. In September 1996 CAP director Gary Ruskin asked the House Committee on Standards of Official Conduct to investigate possible violations of standards of congressional conduct by DeLay. Citing the lists, Ruskin suggested DeLay may have directly linked campaign contributions to official action, in violation of the house rule barring "considerations such as political support, party affiliation or campaign contributions" from affecting "either the decision of a member to provide assistance, or the quality of the help that is given."
Ruskin also raised questions about DeLay's brother Randy, who practiced law by himself in Houston until Tom got elected majority whip. Randy promptly became a registered foreign lobbyist and in one year (according to federal records) banked more than $ 550,000. Along the way, Randy appears to have lobbied his brother on behalf of his clients-and gotten results.
The "vigorous assistance by Representative DeLay in support of the efforts of his lobbyist brother produces the clear impression," said Gary Ruskin, "that Representative DeLay has provided special and inappropriate political favors to his brother and to Cemex," a Mexican cement manufacturer. Citing other cases in which the DeLay brothers had worked for the same goal, Ruskin suggested that the whip's actions may have violated the Code of Ethics for Government Service that says no one in government should "discriminate unfairly by the dispensing of special favors or privileges to anyone."
DeLay was undeterred, and eventually the House Ethics Committee dismissed the complaint. The Committee did advise him it was "particularly important" for a person in his position to avoid any hint that a "request for access or for official action" was linked to campaign contributions.
In April 1997 Wisconsin Representative David Obey brandished what was by then a two-year-old Washington Post article describing how lobbyists wrote drafts of legislation with DeLay's help. DeLay denied "categorically that it ever happened" and challenged Obey to identify the participants. When Obey waved the article under DeLay's nose, DeLay shoved him and called him a "gutless chickenshit."
After the shoving incident, DeLay's spokesman said, "The reason Mr. DeLay was upset was that Obey . . . had questioned his integrity." DeLay ought to be used to that by now.
Last summer, during the House's struggle over campaign finance reform, DeLay was the point man for antireformers. Day after day he stood in the well, using every parliamentary advantage leadership gives to kill the reform. A majority of House members ultimately voted for it anyway.
The Congressman from Enron
One of the top House Republican leaders has been a big beneficiary of Enron contributions and is deeply tied to Enron. Majority Whip Tom DeLay and his political network have collected more than $200,000 from Enron and its executives over the last seven years.
From 1989-2000, Majority Whip Tom DeLay has raked in more than $28,000 from Enron's PAC and employees for his congressional campaign. His PAC, Americans for a Republican Majority (ARMPAC) got $50,000 in soft money from Enron in 2001. Enron gave $10,000 in soft money to ARMPAC in 2000, and between 1995-2000 Enron and its employees gave $47,250 in hard money. Kenneth Lay gave $50,000 to Republican Majority Issues Committee in 2000 - another one of DeLay's fundraising operations. (Roll Call, 2/25/02)
Not only has Tom DeLay raised a lot of money from Enron, but his top staff have raked in Enron consulting fees. Ed Buckham, Karl Gallant and John Hoy were awarded a $750,000 contract by Americans for Affordable Electricity, an Enron-funded coalition, after DeLay recommended to Enron that they hire the team. (Roll Call, 2/25/02) His connections to Enron are so strong that "some call DeLay the 'congressman from Enron,'." (The National Journal June 3, 2000)
Trail of Slime
The son of a drilling contractor, Tom DeLay spent much of his youth among the oil fields of Venezuela. Ever since earning a degree in biology from the University of Houston, DeLay has portrayed himself as a scientist and environmental expert. His clearest application of this expertise, however, was in the realm of killing things: From 1973-84, DeLay operated a Houston-area exterminating business. He often says he ran for office partly because of his frustration over EPA regulation of the pesticides used in his trade.
DeLay is a perfect match for the 22nd Congressional District, home to several of the largest polluters in the country. The area includes a Monsanto chemical plant, a BASF chemical plant, a mercury-contaminated Superfund site, and a Dow Chemical plant that is the largest industrial complex in North America. The Gulf Coast of Texas accounts for more than half of the nation's petrochemical production and one-fourth of its oil refining. Notably, Texas contributes a quarter of the nation's toxic waste. On top of that, the Clean Air Act placed Houston in the second-worst category for air pollution in the country, trailing only Los Angeles.
This is the land DeLay has pledged to release from the shackles of environmental regulation. He's voted against bills to reduce airborne toxic emissions and to give assistance to communities with contaminated groundwater. He's even tried to stifle "right to know" provisions that enable citizens to find out what dangerous chemicals are being released by local industries. Small wonder that in 1995 DeLay was the top House recipient of PAC money from interests seeking to avoid liability for toxic cleanups, with $106,171 in contributions.
DeLay's move into the GOP leadership has pushed his anti-environmental crusade to the forefront of the Republican agenda. In his first two weeks as whip, DeLay tried to repeal the 1990 amendments to the Clean Air Act -- widely seen as one of President Bush's most significant accomplishments. He also pushed legislation cutting the EPA's budget by 32 percent and prohibiting its enforcement of standards for vehicle emissions, toxic discharges by petroleum refineries, and arsenic in drinking water. In December 1994, DeLay formed Project Relief, a coalition of industry lobbyists whom he invited to craft the moratorium on federal regulation passed by the House two months later. Tellingly, the 115 PACs associated with Project Relief lobbyists had given more than $10 million to House candidates in 1993-94, according to a study by the Environmental Working Group.
DeLay's fundraising ability has powered his rise to the GOP leadership. By his own count, he raised $2 million for GOP candidates, especially freshmen, in the 1994 election. In turn, the freshmen overwhelmingly supported his bid to become majority whip, even over the opposition of Gingrich, who supported the more moderate Bob Walker (R-Pa.).
"I worked harder than anybody else," DeLay said. "I raised more money than anybody else. I was smarter than anybody else...Once I sink my teeth into something, I don't turn loose until I win." In the budget battle with Clinton, for example, DeLay led the dissident freshmen who initially bucked Gingrich's command, arguing against any compromise with the president and extending the government shutdown. While DeLay didn't win that battle, his extreme tenacity leads many on the Hill to believe that if Gingrich's speakership unravels, DeLay, rather than the milder Majority Leader Dick Armey, will take his place.
Nicknamed "the Hammer" for his fundraising tactics, DeLay has been explicit in spelling out the new rules of the game in the GOP Congress. "He told us it's a new day now," recalls one lobbyist. "We were all going to hire Republican lobbyists, and our PACs were going to give the money to Republican candidates. They were going to take names and keep score."
Gary Ruskin, director of the Congressional Accountability Project, says, "It's easy enough to say, 'Aw, they all do that.' But they don't. DeLay was essentially telling lobbyists, 'If your PACs give money to Democrats, if you even employ Democrats, you're going to be denied access.' That's completely unethical."
As much as DeLay enjoys throwing his weight around in Washington, he knows how to play Texas hardball as well. And no one has benefited more from DeLay's clout than his younger brother, Randy. In at least four instances since 1995, Tom DeLay has pushed legislation or pressured federal agencies on issues that benefited interests for whom Randy was a paid lobbyist. If Tom DeLay is the Hammer, brother Randy is the Nail.
On July 3, the federal Surface Transportation Board (STB), in its first major merger decision since the agency's creation by Congress in January, ruled to allow a $5.4 billion merger between the Union Pacific (UP) and Southern Pacific (SP) railroad companies. The board's decision came despite fierce opposition to the merger from state and federal agencies, elected officials, and industry trade groups.
The U.S. departments of Justice, Transportation, and Agriculture all opposed the merger. Anne Bingaman, assistant U.S. attorney general for antitrust matters, told the Austin American-Statesman it is "the most anti-competitive rail merger in history." The Justice Department claims it could increase consumer costs by $800 million per year.
In Texas, the merger met with strong bipartisan opposition. Rebecca Fisher, assistant deputy chief of the Texas attorney general's antitrust office, says, "The merger will have a crippling effect on both shippers and receivers in Texas."
Nowhere will the effects of the merger be felt more keenly than in DeLay's own Houston district. Texas Railroad Commissioner Barry Williamson, a conservative Republican, points out that the merged railroads will have "a stranglehold over Houston," controlling 11 of the 13 rail lines connecting the city to the Gulf Coast's petrochemical plants. For this reason, many industrial interests in and around DeLay's district also opposed the deal.
So why did Tom DeLay work behind the scenes to ensure the merger?
On February 28, Tom DeLay and five fellow Texas representatives (all but one of them Republican) wrote the STB: "Texas shippers should...benefit from extensive capital improvements, expanded facilities, and track upgrades...Competition could also be much stronger than if UP and SP remained separate railroads." Ten House Republicans from California sent the STB a virtually identical letter.
Neither letter mentioned another reason DeLay and his GOP colleagues may have been inclined to support the merger: Union Pacific's PAC had given Republican Party committees $98,550 in soft money since 1995, and also had contributed to numerous candidates (including DeLay, who received $5,000). Still more impressive is the $300,000 in GOP soft money given by Denver billionaire Philip Anschutz a few weeks after the letters' signing. As the largest individual shareholder in Southern Pacific, Anschutz stands to make hundreds of millions of dollars from the merger.
And if love of money wasn't enough to make DeLay favor a proposal likely to hurt his district, love of family may have been. According to lobbyist disclosure forms filed two weeks before DeLay wrote to the STB, his brother Randy was under retainer as a lobbyist for Union Pacific. Listed as his specific lobbying issues were: "Merger Application pending before Surface Transportation Board...and edification of Texas Congressional Delegation."
In other words, Randy was lobbying his own brother on behalf of the rail merger -- apparently with considerable success. Nor is this the only example of their collaboration.
In January, as the NFL's Houston Oilers planned a move to Nashville, Tenn., Tom DeLay co-sponsored a resolution limiting the ability of privately owned sports franchises to move to new cities. DeLay admitted that this stance was a departure from his usual philosophy. "I am a free-market nut," DeLay acknowledged to the Houston Chronicle, but because of the teams' "special responsibilities" to their hometowns, he said, their ability to move should be regulated by the government.
A previously undisclosed factor may have helped turn DeLay against the market forces he so cherishes: Mother Jones has determined that Randy DeLay was lobbying for the resolution on behalf of the city of Houston. (As Mother Jones goes to press, Randy DeLay has not yet been required to disclose the fees he has received from Union Pacific and the city of Houston. He also declined interview requests.)
In July 1995, Tom DeLay wrote an unsolicited op-ed for the Houston Chronicle, alleging that a tariff on Mexican cement was driving up prices in the United States. He also asked other members of Congress to write the Clinton administration in an effort to have the tariff overturned. DeLay opposed the tariff even though it had been imposed during the Bush administration, with the apparent support of Newt Gingrich's GOPAC.
Why would DeLay cross swords with fellow GOP conservatives? One possible answer presented itself when Roll Call, a Capitol Hill newspaper, reported that Randy DeLay was lobbying against the tariff as a registered foreign agent of Cemex, the Mexican cement giant. According to lobbyist disclosure forms, Cemex paid Randy more than $176,000 between July and November 1995, during which time he personally lobbied his brother on behalf of Cemex at least four times.
But the biggest potential payoff for the DeLays could come from old-fashioned government pork. Plans are under way to build a U.S.-Mexico NAFTA "superhighway" through Texas, and boosters of two alternate routes are vying for that designation -- and the estimated $25-$50 billion in federal funds and commercial development that will go with it. One option is a proposed Interstate 69, which would follow the path of the existing U.S. Highway 59 through DeLay's district and on to Louisiana and Indianapolis.
Tom DeLay is co-chair of the Congressional I-69 Caucus, which has 36 members in the House and Senate. In the fall of 1995, he inserted language in the National Highway System bill designating part of U.S. 59 as Interstate 69. "Interstates bring with them economic growth and development," reads a statement released by DeLay. "The construction of I-69 through Houston brings these opportunities to the 5.5 million people living and working in Texas."
Again, what the statement did not mention is that Randy DeLay lobbied heavily for I-69 and receives at least $15,000 per month from pro-I-69 interests, including Pharr Economic Development Corporation and the I-69 Mid-Continent Highway Coalition.
Tom DeLay admitted to the National Journal that he has worked with his brother on the cement tariff and the I-69 proj-ect, but scoffed at intimations that this might constitute a conflict of interest, claiming his brother hadn't been treated "any differently" from other lobbyists. (DeLay declined to respond to Mother Jones' inquiries about the rail merger and the sports franchise resolution.)
Some observers, however, say the DeLay tag-team efforts look like influence-peddling. "This pattern of conduct suggests Tom DeLay has been doing special favors for his brother," says Bill Magavern, director of Public Citizen's Congress Watch. "He is clearly abusing his position."
"The DeLays ought to be investigated by the House Ethics Committee," says Gary Ruskin of the Congressional Accountability Project. "The fact they haven't been investigated is just one more example of how House members have blocked the ethics process in the 104th Congress."
DEFENDER OF SWEATSHOPS
THE GOP WHIP THINKS THAT AMERICAN COMPANIES USING UNDERPAID GARMENT WORKERS IN DISTANT SAIPAN IS JUST FINE.
In the swirling spotlight that surrounds the presidential impeachment trial, it's finally Tom DeLay's turn to move into the hot seat. The slick-haired Texan with a fondness for calling President Clinton a liar is starting to face questions about his own contradictions.
A former business partner in DeLay's exterminating business in suburban Houston popped up in the pages of the New Republic this week with charges that the Republican whip had lied about his ties to the company in a 1994 lawsuit, and may have illegally siphoned off company funds to pay off campaign debts.
DeLay has excoriated the president for "trying to use legalese and lawyerese to do two-steps around the questions," author Ann Louise Bardach observed in her New Republic piece. But the three experts Bardach asked to examine DeLay's depositions -- under oath-- in the lawsuit concluded that he had done exactly the same thing.
DeLay's spokesman Michael Scanlon blew off the allegations as old news: "Our political enemies have been digging into Mr. DeLay's past for years," he said in a prepared statement.
Indeed they have, but they've been getting nowhere. Lacking a lurid enough angle in sex-obsessed Washington, they've had no success in knocking DeLay off his pedestal. Now, however, comes the faint cry of virtual slave laborers far out in the Pacific Ocean, as unlikely a threat as the nasty-tongued Republican could have ever imagined. But the faceless, nameless sweatshop garment workers of Saipan suddenly have some legal muscle.
The story really begins back in June 1944, when 71,000 U.S. Marines took Saipan from the Japanese Army at a terrible cost in blood. Planting the American flag there turned out to be critical. Fourteen months later a B-29 took off from nearby Tinian carrying the atomic bombs that would abruptly end the war. For the next half century the Commonwealth of the Northern Mariana Islands, as they would become known, generally enjoyed the benign neglect of Washington. In 1986, the 27,000 islanders were granted American citizenship.
It was around this time, however, that mandarins from Hong Kong and the People's Republic of China began setting up textile factories on Saipan and importing labor from the mainland, as well as from Bangladesh and the Philippines, to cut and stitch cloth for garment makers including JC Penney, the Gap, Tommy Hilfiger, Liz Clairborne, Jones New York, Abercrombie & Fitch, Levi Strauss, Nautica and many others -- a virtual Who's Who of designer labels. The idea was to slip under the radar of U.S. quotas and duties, which would cost the manufacturers millions more if the garments were made outside U.S. territory. Garments from Saipan are made from foreign cloth, assembled by foreign workers on U.S. soil and labeled "Made in the USA."
And they are made cheaply. Wages in the factories average about $3 per hour -- more than $2 less than the U.S. minimum wage of $5.15. No overtime is paid for a 70-hour work week. But that's hardly the worst of it. Far away from the swank beachside hotels, luxurious golf courses and the thousands of Japanese tourists snorkling around sunken U.S. Navy landing craft in the clear waters, some 31,000 textile workers live penned up like cattle by armed soldiers and barbed wire, and squeezed head to toe into filthy sleeping barracks, all of which was documented on film by U.S. investigators last year.
The unhappy workers cannot just walk away, either: Like Appalachian coal miners a generation ago, they owe their souls to the company store, starting with factory recruiters, who charge Chinese peasants as much as $4,000 to get them out of China and into a "good job" in "America." Their low salaries make it nearly impossible to buy back their freedom. And so they stay. The small print in their contracts forbids sex, drinking -- and dissent.
"I am very tired," wrote Li Zhen Hua, a 29-year-old Chinese woman in a letter to a friend obtained by the weekly Dallas Observer. "I want to go back to my country but I can't because we must keep [sic] two years ... Very busy. So hard. Every day work up to 1:30. I've to work on Sunday. Too much to respond to your letters."
Enter Tom DeLay and his Texas Republican sidekick, Dick Armey. When the Clinton administration sought to yank Saipan's factories into the 20th century in 1994, requiring the workers be paid a minimum wage, overtime and their living conditions improved, the island government hired a platoon of well-connected Washington lobbyists, headed by former DeLay aide Jack Abramoff, to block the plan. Abramoff, in turn, personally or through his family, contributed $18,000 to DeLay's campaign coffers. So far, the island government has paid the firm of Preston Gates Ellis & Rouvelas Meeds $4 million for their efforts, records show. They also treated DeLay and Armey to trips to the island, where they played golf, snorkled and made whirlwind visits to factories especially spiffed up for the occasion, according to several accounts.
"Even though I have only been here for 24 hours, I have witnessed the economic success of the Marianas," DeLay told a banquet crowd. As for the critics of the plantation system, DeLay told the dinner crowd darkly, "You are up against the forces of big labor and the radical left."
The whip was apparently referring to the Clinton administration, whose official in charge of the Marianas, Insular Affairs Chief Al Stayman, wanted to change the sweatshop system. In a private e-mail from Abramoff to island officials, which was made available to Salon, the lobbyist vowed he would "impeach Stayman and his campaign."
Stayman is still on the job, but the Republicans, led by DeLay, have blocked every effort by the Democrats to hold hearings on the issue.
Help may be on the way, though, via a California law firm that this month filed a multimillion dollar suit against the factories in the name of "John Does 1-23." The suit, filed last week in Saipan and state and federal courts, accuses the firms of exploiting thousands of indentured foreign workers in sweatshop conditions on U.S. soil.
"A free market success," DeLay calls Saipan's indentured worker system. If the Republicans take a drubbing at the polls in 2000, however, DeLay shouldn't be surprised if vengeance is in the air, even from his fellow Texas fat cats. Scores of textile plants in cities like El Paso and Dallas have had to shutter their doors in the face of cutthroat competition from companies like those in Saipan.
All of which is ironic, considering how DeLay recently stood up for Chinese dissidents in a different context. On the eve of the president's visit to China last June, DeLay and 150 other Republicans signed a letter urging Clinton to call off his trip because of Beijing's treatment of religious and political dissenters.
Beijing had been cracking down on dissidents since the Tiananmen Square massacre a decade earlier, of course, but that didn't stop DeLay from making his own trip, paid for by a private foundation backed by private corporations with business in China.
"Some might say that gives hypocrisy a bad name," cracked Rep. Maurce Hinchey, a New York Democrat. But as the records unearthed from DeLay's extermination company this week showed, he's become an expert in that.
DeLay Advisers Reaped Enron Windfall
In early 1998, Enron Corp. secured a $750,000 contract for political operatives tied to House Majority Whip Tom DeLay (R-Texas) to secretly conduct an aggressive grassroots campaign pushing energy deregulation, according to documents obtained by Roll Call and interviews with individuals involved with the effort.
The contract was awarded after DeLay personally recommended to Enron officials that they hire the team of strategists who make up the inner circle of his political and fundraising machine.
In a January 1998 meeting at his home in Sugarland, Texas, DeLay reviewed plans to have Enron bankroll a new grassroots operation to jump-start the deregulation debate with three of his operatives: Ed Buckham, who had just left the Congressional payroll as DeLay's chief of staff while simultaneously launching his own lobbying firm; Karl Gallant, a consultant to DeLay's political action committee; and John Hoy, a partner in the California-based consulting firm of Schuman, Hoy & Associates, which worked for DeLay during the 1996 GOP convention.
In the months before the meeting at DeLay's home, Gallant and Hoy - both veterans of stealth offenses promoting the tobacco industry - devised a proposal to conduct a national grassroots campaign operated solely at the direction and benefit of Enron. The four-page proposal was outlined in a memo sent to the Majority Whip's office on Nov. 12, 1997, and was printed on the letterhead of Buckham's lobbying firm, Alexander Strategy Group, according to a copy of the document obtained by Roll Call. It included Buckham's name as president of the company, despite the fact that he was still on DeLay's payroll.
Shortly after the Sugarland meeting, a coalition financially dominated by Enron, Americans for Affordable Electricity, awarded a $750,000 contract to DeLay's operatives, despite reservations among other coalition members and a late entry into the bidding process.
The previously undisclosed connection between DeLay and Enron offers a glimpse into how the Texas lawmaker and the corporate giant combined forces behind closed doors to deliver a bare-knuckled political punch aimed at breaking a legislative logjam frustrating efforts to deregulate the $300 billion-a-year electricity market, a top goal of both Enron and DeLay.
The arrangement lasted just a few months and ended in a dispute that ultimately reduced the final payment to the operatives to approximately $500,000. But it was just the first in a series of lucrative lobbying deals that saw the energy giant pay $570,000 to firms operated by Buckham and Gallant over the next three years. That came on top of the nearly $200,000 in direct contributions from Enron and its executives to the web of political organizations that make up DeLay Inc.
At the top of the DeLay political hierarchy sits Edwin Alexander Buckham, a 43-year-old ordained evangelical minister with a dense political and legislative resume who rose to become DeLay's chief of staff after Republicans won the majority in 1994. Buckham left DeLay's staff Dec. 20, 1997, but was immediately hired as a consultant for the lawmaker's leadership PAC, Americans for a Republican Majority.
On Oct. 31, 1997, nearly two months before formally leaving the Whip's office,Buckham established his lobbying firm, Alexander Strategy Group, according to Maryland corporate records. Sources close to the DeLay camp said Buckham was angling for a consulting or lobbying deal with Enron even before he exited DeLay's office and hoped to use DeLay's influence with the company to win that business.
"There was a lot of high-level contact between Buckham and Enron," said a source close to the situation. "It was known among the office that Buckham was trying to maneuver to get a big contract with Enron. It made a lot of people uncomfortable, but you would pay if you challenged Buckham." Buckham strenuously denied having anything to do with pitching a lobbying deal to Enron or developing plans to launch a grassroots drive for deregulation. But the detailed memo proposing just such a campaign for Enron was faxed to the Majority Whip's office on Nov. 12, 1997, more than a month before Buckham officially left. "We envision an aggressive field force operating under the direction of Enron and capable of engaging the opponents of competition wherever necessary," the memo read in part. "Additionally, this would put in place an operation capable of addressing state regulatory and legislative issues of concern to Enron."
Accompanying the memo were talking points that appear to have been intended to help DeLay pitch the plan to Enron. "I have asked my top political people to analyze the situation and develop a plan to re-energize the deregulation campaign," read one of the talking points. "My people have advised me - and I agree - that Enron is the only player with the guts and the strategic savvy to get the job done."
Another proposed talking point asks, "Can you talk to my people and see if their plan can help you?"
Under federal law, Buckham was barred from lobbying DeLay or his staff for one year after leaving office. Federal regulations also prohibit a lawmaker or Congressional employee from using his or her official position to solicit employment for when they leave public service.
In an interview, Buckham denied having anything to do with the writing of the memo, but he did not dispute its authenticity. Buckham said the memo was written by Gallant and Hoy, who had mistakenly used the ASG letterhead because Buckham's colleague, James Ellis, was going to work on the campaign. Ellis, who worked with Gallant on pro-tobacco operations, currently serves as executive director of DeLay's ARMPAC. "I did not write nor authorize the writing of this memo," Buckham said.
"After talking with John Hoy and Bob Schuman with Schuman, Hoy & Associates, who were the consultants that wrote the memo, they acknowledged that I was not involved, but rather it was Jim Ellis, who was with ASG at the time, they were working with. They acknowledge they made a mistake in mocking up ASG letterhead in California with my name on it."
Buckham described Ellis as a part owner and officer of his lobbying firm. But Maryland incorporation papers for ASG list only Buckham as president and his wife, Wendy, as secretary and treasurer. Ellis was unavailable for comment.
Hoy, in an interview, backed Buckham's explanation. "That was something mocked up by our office for us to do internally. It was a mistake."
Hoy said that he and Schuman developed the proposal with Gallant. Pressed as to why his established firm would produce a proposal on another firm's letterhead, Hoy acknowledged that they had intended to work with ASG through Ellis and, eventually, Buckham. "We knew at one point that we would want to work with Alexander Strategy Group," Hoy said. "We are not lobbyists. We do not lobby," he added of his San Diego firm.
The January 1998 meeting with DeLay at his home to discuss the Enron pitch was attended by Buckham, Gallant and Hoy, according to all three men. Ellis did not attend that meeting. Gallant said he was not sure if he ever presented the written proposal directly to DeLay during the meeting.
He defended the decision to seek DeLay's help in soliciting work from Enron, saying aides to lawmakers on both sides of the aisle make similar requests of their former bosses all the time. "You can ask alumni of a prominent elected official - Democrat or Republican. They expect and deserve a recommendation that this person is trustworthy and does his work and has a good plan," said Gallant. "Now, I don't remember if I asked Tom to call [former Enron Chairman] Ken Lay or not. But I certainly would have hoped if anyone had asked him [he would say], 'Karl's a good guy, he does good work and I like what he's talking about.'"
But the purpose of the talking points remains a bit of a mystery. Hoy claimed he wrote them but could not explain for whom they were intended. "I don't know," Hoy responded when asked who the "I" referred to in the talking points. He called them "generalized talking points" and said his firm routinely produces such scripts when trying to sell proposals to clients.
DeLay, through a spokesman, admitted that he had personally recommended his operatives to "Enron and other companies" involved in the deregulation fight, but could not recall with whom he had spoken. DeLay himself declined to be interviewed for this article.
"Tom probably talked to Enron or somebody associated with them, as well as a lot of other companies who wanted to be involved with this," said Stuart Roy, DeLay's communications director.
"Tom talked to the companies, Enron and others, about Schuman, Hoy, and referred Schuman, Hoy because they are a good grassroots firm. Under no circumstances would he, or did he, recommend Buckham while he was still on his payroll." Roy claimed DeLay "did not see this memo," despite the fact that he met with Buckham, Gallant and Hoy at his home to discuss the proposal.
Shortly after leaving Sugarland, Gallant and Hoy met with several Enron officials in Washington, including Cynthia Sandherr, then an Enron vice president and one of its top lobbyists. Sandherr had formerly worked for Rep. Joe Barton (R-Texas), another deregulation advocate, and she was close to DeLay and his staff, said several sources within the DeLay camp.
But Sandherr and other Enron officials reacted coolly to the proposal for a stand-alone grassroots effort, favoring instead to retain their ties to the broad-based Americans for Affordable Electricity coalition. That organization had been up and running for most of 1997, but two opposing groups secretly funded by traditional utilities and organized labor were pummeling key lawmakers with their own grassroots tactics and were outscoring the Enron-backed group.
Realizing they needed to do more, members of the AAE coalition had already decided to beef up the grassroots component of their work and had solicited bids in February 1998. Despite interviewing other consulting firms that had already submitted formal written bids, Sandherr pressed other board members to allow a last minute oral presentation by Gallant, several board members said. Gallant made the pitch himself, without the presence of Schuman or Hoy. Sandherr declined to comment for this article.
John Motley, the AAE coalition chairman at the time, said in an interview that Enron made clear its preference to hire the Gallant-Schuman, Hoy team. "Enron was fairly emphatic that they wanted this firm to do the work, and they frankly lobbied others within the coalition and eventually everybody said, 'OK, we'll give them a shot,'" Motley said.
Even though Motley and several other board members had reservations, the coalition formally awarded the $750,000 contract to Schuman, Hoy & Associates. That firm, in turn, subcontracted work to Gallant's firm, the Gallant Co., and Buckham's firm, Alexander Strategy Group. Motley said he wasn't pressured directly by DeLay to make the hire, but that the DeLay connection was clear. "Everybody knows that Karl has worked for [DeLay]," said Motley. "They're trying to trade on who they know and what they know about the system."
Awarding the contract to them was viewed by other board members as a way to please DeLay, an important consideration since the Texas Republican was the most powerful and forceful deregulation advocate on the Hill.
After Schuman, Hoy won the contract, DeLay also publicly described himself as "re-energized" about the chances for his deregulation legislation in news reports from mid-April 1998, even though it was buried in the then House Energy and Commerce Committee. Former Rep. Tom Bliley (R-Va.), the panel's chairman at the time, jokingly referred to DeLay's legislation as "the Enron bill."
But DeLay continued to push his legislation, with Enron's help. The Majority Whip even called a "Power Summit" in Houston, in April 1998, to urge adoption of his plan, which would have opened all U.S. electricity markets to competition within a year, a potentially huge victory for Enron. Former Enron CEO Jeffrey Skilling, a key figure in the company's collapse, was among those taking part in that event, according to Oil and Gas Investor, an industry trade publication.
The grassroots work called for in the AAE contract involved setting up field operations to stir up activists across the country, with the focus on key Congressional districts. One tactic, according to Hoy, consisted of drafting editorials and then approaching local school board members to submit them to newspapers under their own names. But within a few months things turned sour for the DeLay team.
Members of Americans for Affordable Electricity clashed with Schuman, Hoy and Gallant over strategy for the grassroots campaigns, including which lawmakers to target. "I think you'll find the consensus was that after they got going, the work was incomplete," said Motley. The coalition members also differed with Enron over the targets. "Enron was an eagle in this fight and some of the rest of us were geese. They were flying up there and they had a vision of what they wanted the electricity world to be, and the rest of us probably had a more limited agenda," he added.
Gallant acknowledged having to constantly defend the quality of their work. "We sat through a lot of meetings at [Americans for Affordable Electricity] where we were grilled about the effectiveness of our contract," said Gallant. "Everything was pored over."
The coalition eventually dropped the team and negotiated a roughly $500,000 settlement, former coalition members said. "Hiring them was a mistake. Frankly, it was more trouble than it was worth," Motley said. But Buckham, Gallant and Ellis quickly rebounded and soon began to work directly for Enron.
In February 1999, Gallant's firm, the Gallant Co., registered to lobby on behalf of the Alexander Strategy Group (Buckham's firm) on electricity deregulation. Enron was listed as an affiliate on that contract, meaning it paid more than $10,000 for Gallant's services in a six-month period as well as supervising the registrant's lobbying activities. Gallant earned $60,000 for that work in 1999, another $80,000 in 2000 and $60,000 in the first half of 2001, for a total of $200,000. In June 1999, Buckham himself registered as an Enron lobbyist. The energy giant had paid his firm a total of $370,000 as of June 2001, according to lobbying disclosure reports.