Does Everybody Do It?
Campaign finance is an
arcane and confusing subject, filled with unspoken understandings. One of these
is the distinction between rules that must be obeyed and rules that can be
safely flouted. In the Republican primaries, for instance, aides to Bob Dole
admitted that they were going to exceed legal limits on how much they could
spend, an act commentators compared at the time to running a red light.
Meanwhile, Bill Clinton and his aides were helping to develop the so-called
"issue" ads produced by state parties--ads which, in theory, weren't supposed
to be co-ordinated with his re-election effort. And neither party even bothered
to claim that the tens of millions being raised in so-called "soft money,"
which cannot be legally used for federal elections, was being spent on anything
other than the federal election. None of these clear violations was deemed to
be especially scandalous, even by prudes at places like Common Cause.
Meanwhile, though, a Dole supporter named Simon Fireman is confined to his
Boston apartment, where he wears an electronic collar and ponders the $6
million fine he must pay for enlisting his employees at Aqua Leisure
Industries, a maker of inflatable pool toys, in a scheme to contribute $69,000
to the Dole campaign.
A similar
invisible line separates the campaign-finance violations that become major
media scandals and those that go unmentioned or rate only as footnotes in the
press. It is not immediately obvious why reporters are so fascinated by John
Huang's possible use of his position at the Commerce Department to raise money
for his party, while they largely ignored the last two secretaries of commerce,
Clinton's Ron Brown and George Bush's Robert Mosbacher, who were using the
entire department as a fund-raising vehicle. Why is Newt Gingrich's use of
GOPAC to raise undisclosed contributions a scandal being investigated by the
House Ethics Committee, while Republican National Chairman Haley Barbour's
front for avoiding disclosure, the National Policy Forum, rates as a
nonstory?
In fact, there is no logic to any of it. What's considered
an outrage, and even what's considered a crime, are matters determined largely
by accident. Advocates of reform are always happy to have a high-profile
scandal, like the presently unfolding "Indogate," to help them sensitize the
public to just how seamy the whole business of campaign financing is. The last
thing they're about to do is explain away the latest revelations as just an
exotically textured version of what goes on every day. And press coverage is
largely driven by how big a fuss is made by members of the opposition--not by
any barometer of relative venality. Right now, Republicans are making an
enormous fuss about the Democrats, so the story is huge. But we must pause and
ask: Are we making an example out of the DNC for misdeeds that everybody
commits? Or did John Huang and James Riady--and perhaps Harold Ickes and Bill
Clinton--really do something unusually bad in the last campaign cycle?
Much
hinges, of course, on facts we don't have. Huang may have asked all his Asian
contributors whether they were legal residents of the United States and been
misled by them. There's no hard evidence that he did DNC business at Commerce
or government business after Clinton moved him to the DNC in 1995. But
assuming, for purposes of argument, that most of what has been alleged by
Republicans is true, the Indonesian scandal potentially involves three
categories of wrongdoing: 1) accepting illegal contributions; 2) trading favors
for contributions; and 3) misusing a government position to raise campaign
money. Actually, there is a fourth question--whether Huang violated federal
conflict-of-interest rules by dealing with his old company, the
Indonesian-based Lippo conglomerate, while he was a midlevel official at the
Commerce Department. But that's a matter of personal corruption unrelated to
the Democratic Party financing, so I won't dwell on it here, even though it's
potentially the most serious charge against Huang.
Question 1: The DNC has now returned
nearly half of the $2.5 million in soft money raised by Huang from Indonesian
and other Asian-American sources. Assuming that these contributions were
illegal because the contributors weren't legal residents (something that has
been fully established only in the case of one $250,000 Korean contribution),
did Huang and the DNC do anything out of the ordinary ?
Answer: Not
really.
There are
examples beyond number of simply illegal contributions that the press and
public just shrugged off. Even Pat Robertson got busted in 1988 for the use of
a Christian Broadcasting Network plane--his travels were valued at $260,000. If
one focuses on the narrow category of contributions that are illegal because
they come from foreigners (even though it is arguably no worse than any other
category of violation), there is still little novelty to the Huang affair.
Federal Election Commission files disclose many examples of money taken
illegally from foreign nationals: Japanese interests contributing to candidates
in local races in Hawaii, South Americans giving to the Democratic Party of
Florida, and so on. Just a few weeks ago, the RNC returned $15,000 to a
Canadian company called Methanex after the contribution was disclosed in
Roll Call . 's recent $1 million contribution to the California
Republican Party may fall into this category as well. The same goes for
contributions that are illegal by virtue of their having been made "in the name
of another," an issue that has surfaced in connection with Al Gore's Buddhist
temple fund-raiser. The FEC has frequently disallowed contributions made to
both parties under aliases.
If the Huang case is novel, it would have to be as a
deliberate and systematic violation of the laws regarding contributions by
noncitizens. In terms of being systematic, there isn't much of a case. Both
parties have employed ethnic fund-raisers--Jewish, Korean, Greek, Chinese--for
many years. Newt Gingrich held a Sikh fund-raising event last year in
California. in 1992 was Yung Soo Yoo, who makes John Huang look like a piker
when it come to sleaze. One of the co-chairs of Asian-Americans for Bob Dole
was California Rep. Jay Kim, who is under investigation by the FEC for taking
illegal contributions from four Korean companies.
According to those with
experience in fund raising, it is often a delicate matter to establish whether
ethnic donors are eligible to give. When someone offers to write you a check
for $5,000, you do not ask to see a green card. The reality that neither party
is in the habit of investigating its donors is illustrated by various
outrageous incidents. In 1992, for example, Republicans got contributions
totaling $633,770 from a Japanese-American with Hong Kong connections named
Michael Kojima. No one bothered to ask where Kojima, a failed restaurateur with
ex-wives suing him for nonsupport, got the money. Ironically enough, his
biggest creditor turns out to have been the Lippo Bank of Los Angeles, where he
owed $600,000.
Huang was
not really an innovator; he was simply more successful than his predecessors in
both parties in tapping ethnic subcultures for cash. What Huang's higher-ups at
the DNC can most be faulted for is not following suspicions they should have
had about the huge sums he was reeling in. Instead, they looked the other way.
In 1994, the DNC abandoned its own procedure for vetting contributions for
legality. We don't know exactly why this happened, but it's a good bet that it
had something to do with the pressure coming from the White House to raise
extraordinary amounts of money for the upcoming 1996 race. The culture of
fund-raising rewards quantity, not care. It discourages close scrutiny and too
many questions. The less you ask, the more you get. And given that there has
been no real enforcement of these rules in the past, fund-raisers haven't lost
a lot of sleep about contributions turning out to be tainted. If the money goes
bad, you simply return it with the appropriate regretful noises.
Question 2: Is the Lippo scandal an
egregious example of a political quid pro quo?
Answer: Definitely
not.
Examples of favors in
exchanges for campaign contributions are plentiful. Consider, for instance, the
relationship between Bob Dole and Chiquita. In 1995, Dole introduced
legislation to impose trade sanctions on Colombia, Ecuador, and Costa Rica--but
not Honduras, where Dole's favorite bananas are grown. Why was a senator from
Kansas so interested in bananas? It might have had something to do with
Chiquita giving $677,000 to the Republican Party in the last campaign cycle or
the generous offer by its CEO, Carl Lindner, to let Dole use the company jet.
("Sen. Dole has taken this position because it is right for America," Dole
spokeswoman Christina Martin said earlier this year. "To suggest any other
reason is totally absurd.") Or, there is the relationship between .
This kind
of treatment for big contributors is quite routine. In the Indonesia case,
however, there is as yet no evidence that President Clinton did anything about
his backer James Riady's concerns over trade with China and Indonesia beyond
listening to them. Nor is there likely to be any evidence: Big foreign-policy
decisions simply aren't susceptible to personal favoritism the way EPA
regulations are.
Question 3: Did John Huang break new ground
in exploiting his government office for campaign-fund-raising purposes?
Answer: No.
The honor here actually goes
to Robert Mosbacher, George Bush's secretary of commerce. As Bush's campaign
chairman in 1988, Mosbacher invented the Team 100--a designation for the 249
corporate contributors who gave $100,000 or more in soft money to the RNC. When
Mosbacher became secretary of commerce, members of the team were rewarded in
various ways, including being invited by Mosbacher on trade missions around the
world and, often, being given ambassadorships. ("That's part of what the system
has been like for 160 years," Mosbacher said when questioned about it at the
time--a judgment the press apparently agreed with.) Mosbacher's last act as
commerce secretary was a tour of 30 cities to meet with business executives
about how he could help them with exports. When he left the department shortly
thereafter to run Bush's re-election campaign, he turned to the same executives
for contributions.
In his own
use of the Commerce Department to dun corporations for campaign funds, Ron
Brown was Mosbacher's disciple, though he proved to be an even greater talent
than his master. As chairman of the DNC in the period leading up to the 1992
election, Brown followed the path laid by Tony Coehlo, the infamous chairman of
the Democratic Congressional Campaign Committee. Coehlo (as documented in
Brooks Jackson's Honest Graft ) was the first to try to compete with the
Republicans for corporate soft money. Brown devised for the DNC a "Managing
Director" program to match Mosbacher's Republican "Team 100."
When Brown became secretary of commerce in
1993, the managing directors were not forgotten. Fifteen DNC staff members went
with him to Commerce, and they knew who the new administration's friends were.
One of those who went with Brown was Melissa Moss, who took over the Office of
Business Liaison at Commerce. This was the office that selected participants
for the high-profile trade missions to such places as China and Indonesia,
which became the focus of Brown's career at Commerce. On these trips, Brown
functioned as a personal trade representative for companies like Boeing and
AT&T. According to an article in the Wall Street Journal by a
reporter who went along on Brown's China trip, seats on his plane were
essentially sold off in exchange for soft-money contributions.
John
Huang was merely a cog in this machine. When he left the Lippo Group in 1994,
Huang became a deputy assistant secretary in the International Trade
Administration, the section of the Commerce Department that handles trade
issues. Under oath, Huang has claimed he had only a "passive role" in the
foreign trade missions--whatever that means. It all . But that's the Commerce
Department Mosbacher created, and which Brown perfected. To present the Huang
story as something new, reflecting the uniquely severe moral failings of
William Jefferson Clinton, is absurd.
So if, in fact, both parties are equally implicated in all
the categories of campaign-financing sleaze raised by the Lippo case, why is
the Indogate scandal such a big story? There are three reasons: reformers,
reporters, and Republicans. Reformers are happy to have any good example to
illustrate the evils of the system. Reporters are trying to compensate for
suggestions that they are biased in favor of the Democrats. And Republicans,
who have been the black hats of the campaign business since Watergate, are
seizing an opportunity to finally turn the tables.
The Republican outrage may be
hypocritical, but in another sense, it is sincere. GOP leaders are furious at
losing an advantage in corporate fund raising that dates back 100 years, to the
election of 1896, when William McKinley's legendary money man Mark Hanna
mobilized American business to stop the Democratic populist William Jennings
Bryan. In the 1980s, the Republican advantage in total donations was still as
high as 5-1 and never less than 3-1. In the 1992 election cycle, however, Ron
Brown whittled it down to 3-2, thanks to corporate contributions. In 1996, the
Democrats nearly caught up in the chief corporate category: soft money. With
the help of Huang and others, they raised $102 million this year--almost as
much as the Republicans' $121 million. The way they did it was simple:
imitation.
