Watchdog group says influence peddling sets stage for breaking law

By: WILLIAM FINN BENNETT - Staff Writer / NC Times

Defense companies live or die on the spending decisions made by members of Congress who sit on the powerful committees and subcommittees that control defense spending.

With billions of dollars in government contracts at stake, Washington insiders say defense companies and their lobbyists weave a web of influence around those elected officials ---- through major campaign donations and fund-raisers, weekend getaways, the payment of entertainment and restaurant tabs, and the lure of cushy lobbying or defense industry jobs once members leave office.

While cozy relationships between companies and congress members are certainly not unique to the defense industry, the fact the nation's security is at stake raises the level of concern over the effects of those relationships, an expert on lobbying by the defense industry said last week.


As U.S. Rep. Randy "Duke" Cunningham faces a federal grand jury investigation into his financial ties to a Washington defense contractor, a Washington insider said last week that influence-peddling is common in the nation's capital.

"You start with campaign contributions, a couple of junkets, a few dinners," said the insider, Keith Ashdown, vice president of policy and communications for Taxpayers for Common Sense, which is described as a nonpartisan federal budget watchdog group. Ashdown was speaking about Congress members in general and not the Cunningham case.

"(Soon) the lines start to get blurry and a congressman can go right off the reservation and outright accept a bribe," he said.

More scrutiny

The connection between defense contractors and Congress members has come under the microscope in the last several weeks as Cunningham, a Republican from Rancho Santa Fe, faces a federal grand jury investigation into his business dealings with a defense contractor.

Questions arose in June after news reports surfaced that Cunningham had sold his Del Mar Heights home to the president of Washington-based MZM Inc. in 2003, apparently at a price that was hundreds of thousands of dollars higher than what other similar homes were selling for in the area at that time. Later, it was learned that Cunningham was living on a Washington yacht belonging to the same man, whose company has received more than $160 million in defense contracts in the last few years.

The deal and spike in MZM contracts raised allegations that Cunningham had used his position on the House Appropriations Defense Subcommittee to steer government contracts to the company in exchange for favors.

Cunningham has said that while he used "poor judgment" by selling his home to a friend who does business with the government, his dealings with the contractor were above-board and that he thinks the investigation will clear him of any wrongdoing.

The investigation has created so much pressure on Cunningham and his family that he announced Thursday he will not seek re-election in 2006.

Ashdown said the story of Cunningham is symptomatic of a larger phenomenon of "too close for comfort" relationships between defense companies, their lobbyists and members of Congress, especially those who sit on powerful defense subcommittees.

"It's a coziness that certainly makes anyone looking in from the outside feel particularly uncomfortable," he said.

Rules prohibit quid-pro-quo, but not gifts

Federal law prohibits members of Congress from accepting a gift that is linked to any official action the member is making or is asked to make. If not connected to any official action, however, the law does allow members to accept gifts of up to $50 at any one time, but establishes a limit of $100 a year in gifts from a single source.

If the gift is from a personal friend, and is not connected to any official action the member may be making, the limit is $250. In order to accept friends' gifts that are greater than $250 in value, the member must apply for and receive permission in writing from the House Standards Committee.

The rules make note that House members and their staff must be especially careful when it comes to small-group and one-on-one meals, tickets or free attendance at sporting events and shows and recreational activities, such as golf.

Lobbyists and corporations use enticements to curry favor with committee members, says Charles Lewis, the main author of the 1998 book "The Buying of Congress" and 2004's "The Buying of the President."

"Sky-boxes, trips on boats and planes, (paying for) restaurants, green fees, these things are fairly common," Lewis said.

"The incestuous relationship between lawmakers and lobbyists is substantial, with a capital 'S', and it's just never prosecuted," Lewis said. "It's pretty clearly out of control. You have a better chance of seeing Halley's Comet than of seeing a conflict-of-interest investigation."

Lobbying is big business

Defense contractors spend huge sums of money every year to lobby members of Congress. Those expenditures take several forms: campaign contributions by individuals who work for those companies or their family members, campaign contributions from political action committees formed by those companies and to which individual employees donate and the hiring of Washington lobbyists to advocate for the company and its products or services.

Those expenditures have but one purpose, a former staffer for the Democratic arm of the House Appropriations Committee said last week.

"Companies are not in the business of throwing away campaign contributions; they are targeted to the member of Congress who can best help them get federal contracts," said David Sirota, who worked as the Democratic spokesman to the committee between 2001 and 2003.

Research conducted by Project on Government Oversight, a Washington think tank that describes itself as an independent, nonprofit organization working to expose corruption in government, shows that between 1997 and 2004, the top 20 defense contractors in the nation made $33.6 million in individual and action-committee campaign donations. They also spent $390 million on lobbyists. Those same companies received a combined $558.8 billion in federal contracts during the same period.

A spokeswoman for the nonprofit said Thursday that all of the organization's funding comes from foundations and individuals, and that it does not accept any funding from government, corporations, labor unions or anyone with a financial stake in the group's investigations.

Campaign donations

Federal laws about campaign donations limit individual donations to $2,100 per person per election to a single candidate, $5,000 per year to a single political action committee, $10,000 per year to the state, district or local party committee and $26,700 per year to a single national party committee.

Members of Congress are extremely deft at staying within the letter of law that prohibits making donations in exchange for favors, Washington insider Winslow Wheeler said last week.

"Those rules make Swiss cheese look like a solid block of concrete," said Wheeler, who is the author of "Wastrels of Defense," a 2004 book that looks at how, in the author's view, pork barrel politics are endangering the nation's security. He is the former national security staffer for U.S. Sen. Pete Domenici, R-New Mexico.

Wheeler described a hypothetical scenario, one he said was typical, in which a congressman gets a $10 million contract for company XYZ and six months later the company makes $6,000 in donations to the congressman's campaign.

Both parties know there is a tacit connection, but nobody ever talks about it, Wheeler said.

"My point is, you don't have to break the rules because the rules permit improper relationships," he said. "In my experience, everyone knows how the game is played; it's legal corruption."

Donations take many forms

One of the ways companies and lobbyists get around those limits is by sponsoring fund-raising events, at which each participant is expected to donate a certain amount to the candidate, according to Craig Holman, a campaign-finance legislative analyst with Washington-based Public Citizen. The group says it is a nonprofit, nonpartisan consumer advocacy organization that represents consumer interests in Congress, the executive branch and the courts.

"This is the most lucrative (fund-raising tool) of all," Holman said. He added that such a fund-raiser can generate $200,000 or more in campaign contributions for a member of Congress.

A spokesman for the Federal Elections Commission said Friday that a corporate officer could legally sponsor such an event, as long as he did not hold the event at corporate facilities and did not use corporate funds to pay for the costs of holding the event.

Lobbyists themselves will also donate to candidates' campaigns, and they will ask other clients to do the same, Holman said.

"That is the most persuasive mechanism that a K Street lobbyist can exercise and they do it with common frequency," he added, referring to the Washington street on which many lobbyists' offices are located.

Norm Ornstein, with Washington-based American Enterprise Institute, agrees with Holman that lobbyists use their connections to drum up more campaign donations for members of Congress.

The institute is a nonprofit government watchdog organization that a spokeswoman last week characterized as being right of center. She added that the group does not have any single major funding source, but said it does not receive government money.

"You can direct your contractor friends to give him a couple of thousand dollars," Ornstein said. Of course, the lobbyist then lets the member know that he was responsible for securing that financial support, he added.

One plum that often awaits a member of Congress who leaves office is a job with a Washington lobbying firm. According to a recent study conducted by Washington-based The Center for Public Integrity, 175 former members of Congress are now lobbyists. And putting those legislators to work is "standard operating procedure" for Washington's top lobbying firms, the report stated.

Campaign travel

Former appropriations committee staffer Sirota said that other perks provided by corporations to legislators often include flights on their corporate jets.

"The corporation gives you a jet to fly somewhere but the campaign only has to reimburse the company for the price of a ticket on a commercial airline," Sirota said.

A spokesman for the Federal Elections Commission said Thursday that if a candidate uses a corporate jet for campaign-related travel, he or she must reimburse the company at the first-class, unrestricted, non-discounted rate on a commercial flight.

American Enterprise Institute's Ornstein agreed that providing private jet travel at commercial airline rates is just one more tool that corporations and lobbyists use to curry favor with members of Congress.

"You let them fly on the plane and they have to pay the equivalent of a first-class ticket, but they end up with a nicer experience," Ornstein said.

A spokesman for a national air charter brokerage said Thursday that the cost of renting a Learjet to fly round trip from Lindbergh Field to Dulles Airport, near Washington, D.C., with a three-day stay in that city could run between $24,000 and $29,000. That Learjet could carry between one and six passengers.

Meanwhile an unrestricted, non-discounted first-class airline ticket for a commercial flight on a major airline between the same two destinations would run about $2,600, a local travel agent said.

Cunningham's travels

Federal campaign records show that Cunningham has made several payments for travel to a Poway company that is part owner of a Learjet. The firm, Group W Transportation Inc. is a sister firm to a company that has received millions in federal contracts in recent years and has also been a heavy contributor to Cunningham's campaign organization, Friends of Duke Cunningham.

According to campaign finance statements, Cunningham paid more than $12,000 to Group W Transportation for travel, between 2001 and 2003. Federal Aviation Administration records confirm that the company shares ownership of a Learjet with several other companies.

Group W is a subsidiary of the Wilkes Corporation, which describes itself as providing technology- and defense-related services. Another Wilkes subsidiary is ADCS Inc. On the Wilkes Web site, ADCS is described as specializing in "data capture and indexing, data conversion, and information management." ADCS received nearly $76 million in federal contracts between 2000 and 2004, according to the Web site www.governmentcontractswon.com. It was unclear how many of those contracts were defense-related.

Federal Election Commission records show the ADCS' political action committee and Wilkes family members have donated $21,000 to Cunningham's campaign coffers since 1997.

The travel payments and campaign contributions were reported and are legal.

In a recent interview with Kenneth Batson, the treasurer for Cunningham's campaign committee, he was asked to provide more details on the nature of the campaign's disbursements to Group W Transportation, but said he would do so only under subpoena.

Cunningham's lawyers did not return calls for comment on the travel.

ADCS officials did not return repeated phone calls over the last two weeks asking them to provide more information on the nature of the Cunningham campaign's payments to Group W Transportation. On the Wilkes Corporation's Web site, which lists all of its affiliates, the only description of Group W Transportation's activities says, "Group W Transportation manages and owns fractional interests in the corporate Learjet."

Public Citizen's Holman said last week that Sen. Russ Feingold, D-Wis., would be introducing a bill within the next few days that would make major changes in dealings between lobbyists and members of Congress. One of the provisions in that bill calls for lawmakers to pay the charter rates, not commercial first-class rates when flying on private jets.

How much influence?

In Cunningham's case, the congressman and member of the House Appropriations' Defense Subcommittee last month released a statement saying he does "not have the authority or ability to award a contract to Mr. Wade's company and no single Member of Congress, no matter how influential, can dictate to the Armed Services who will be awarded contracts."

Former Domenici staffer Wheeler called the idea that Congress members don't have influence over contracts "total crap."

After the Pentagon and the president send their version of the defense appropriations bill to Congress each year, it is reviewed by subcommittees that are charged with oversight of the defense budget.

Working with the subcommittee chairman, members then recommend adding projects to the bill. Many of those projects are for defense contractors located in subcommittee members' home districts. In the current defense budget, the cost of those add-on projects has been estimated at between $9 billion and $12 billion, Wheeler said. He added that the amount of add-ons has gone up steadily in recent years. In 2001, the number stood at $4 billion, he said.

And while those recommendations may be rejected by a branch of the military before becoming law, "woe to the military service that doesn't follow that advice," Wheeler said.

He added that subcommittee members can make life very difficult for branches of service by cutting spending for other projects that the branches really want.

Sirota agreed that Cunningham was being less than candid in his statement.

"That's really stretching the truth," he said. "What he can do is insert language (in the subcommittee report) about where different projects go and who they go to. It will say X million to a company that provides Y services and is located in this region of the country, so that you never actually say the name of the company but describe it so specifically that it could only be that company."

The pet projects that committee members add on to the defense appropriations budget mean less money for essential defense needs, former Domenici staffer Wheeler said.

"Year after year, Congress takes billions out of the operations and maintenance budget to pay for goodies," Wheeler said. "The cost of this stuff is not added onto the defense budget; it is taken out of other defense programs."