Gingrich GOPAC Patrons take out a Contract on America

by Gary Ruskin

 Hoping to develop a "farm team" of promising Republican state and local officials who might advance some day to the Capitol Hill major leagues, then-Delaware Governor Pierre "Pete" S. DuPont IV founded a political organization called GOPAC in 1979. Republicans then held 36 percent of the seats in the House of Representatives. Today, Republican majorities control both houses of Congress and GOPAC is run by House Speaker Newt Gingrich.

GOPAC - the GOP Action Committee - raised some $17 million over the last 10 years and claims that half of the 136 Republican members of Congress elected since 1990 used GOPAC training and briefing materials. Last November, a rookie called up from the GOPAC farm team, Representative George Nethercutt, R-Washington, even defeated Gingrich's predecessor, former Speaker Thomas Foley.

 Despite GOPAC's remarkable political muscle, Gingrich has veiled in secrecy the faces and bank accounts behind the PAC. When he assumed control of GOPAC in 1986, Gingrich instituted a new policy of donor confidentiality. Howard "Bo" Calloway, Chairman of GOPAC between 1987 and 1993, explained to the Los Angeles Times, "We've got some of the shyest people you've ever known who contribute to GOPAC."


Unmasking "shy" donors

 In a GOPAC solicitation circulated prior to the November elections, Speaker Gingrich asked prospective contributors, "Will you help me draft the Republican legislative agenda for the 104th Congress?" Some donors may have interpreted this as an invitation to feather their nests at the public's expense.

 Facing strong public pressure for disclosure, Gingrich announced in November that, from then on, GOPAC donors would be made public. GOPAC made its first Gingrich-era disclosure recently.

 The data the PAC made public was limited to contributions received since the November election, keeping millions of dollars in donations in the dark. Recently, the Multinational Monitor obtained a list of GOPAC donations covering 1985 through 1993. This list, along with the PAC's recent disclosure, unmasks the identities of GOPAC's wealthy patrons.

These sources reveal that many - though certainly not all - GOPAC donors come from the super-rich, right-wing fringe of U.S. politics. Though there are some donors from the pinnacle of Fortune 500 companies or major Wall Street investment banking firms, an unusual concentration of donors reflect locally or regionally based fortunes, many of them privately held corporations or firms. GOPAC appears to be especially attractive to Far Right individuals who have never adjusted to the government- business regulatory relationship of the post-World War II era. In many cases these donors or the companies they run are law breakers, repeat violators of regulatory standards, subjects of ongoing criminal and civil investigations and others with a special interest in seeing regulatory cops taken off the corporate beat.

Among GOPAC's most generous donors are the following individuals:


Banana Republican

 Carl Lindner, the largest post-election contributor, gave GOPAC $55,000 in 1994. Lindner is chair of the American Financial Corporation, a large financial holding company, and a former business partner of savings and loan pariah Charles Keating of "Keating Five" fame. Lindner has settled two sets of fraud charges with the Securities and Exchange Commission (SEC).

Lindner is also chairman and CEO of Chiquita Brands International, Inc. A pending lawsuit against Chiquita in Federal District Court in Houston alleges that Chiquita's use of the pesticide DBCP sterilized 3,500 male banana workers in Costa Rica, Panama and the Philippines, according to Charles Siegal, a lawyer who represents the workers. A Chiquita spokesperson declined to comment because the case is before the courts.

 Another GOPAC supporter heading a company with a record of contempt for labor and Third World people is James Richards, president of Southwire Co., the world's largest manufacturer of copper wire and cable. Richards gave $80,200 to GOPAC between 1986 and 1992. His father, Roy Richards, was the chair and largest shareholder of People's Bank of Carrollton, Georgia, during Gingrich's early years in Congress. At that time, the bank rolled over past-due Gingrich campaign loans over several years and bank officials personally loaned the campaign money that was never repaid, according to a story by Jeff Gerth and Stephen Labaton in the New York Times. Gingrich has been a loyal friend to this corporate patron. "Southwire automatically has my attention every morning," he told reporters in 1989.

More recently, in November 1992, Southwire pled guilty to a "knowing failure to report the distribution of hazardous waste from baghouse filters" which filter lead and cadmium from copper smelter emissions. This hazardous waste was mixed with fertilizer, and illegally shipped to Bangladesh, where it was bought by farmers who spread it on their fields by hand [see Poison Fields," Multinational Monitor, April 1993 ].

 Gingrich was asked at a recent news conference about accepting money from Southwire, a company with a long history of environmental and Occupational Safety and Health Administration violations. "I fully support the Federal Government prosecuting companies when they break the law," he said. "But I hardly think that given the complexity of our environmental and OSHA regulations that having been convicted of a violation turns one into a ęcriminal company,' as you describe it. They are good citizens. They work very hard. They provide very good jobs for over 3,000 people."

 A Southwire spokesperson recently told the New York Times that the company "understands, honors and is committed to complying with all existing laws and regulations."


Cracker Barrel bigots

 Dan W. Evins, who gave $35,000 to GOPAC over a two-year period beginning in 1991, is the chair of a company that created unusual employee- and public-relations problems for itself. The Cracker Barrel Old Country Store Inc. restaurant chain issued a press release in the same year that Evins started donating to GOPAC saying that it would no longer employ people "whose sexual preferences fail to demonstrate normal heterosexual values which have been the foundation of families in our society." Cracker Barrel then fired at least 10 gay employees. A notice the company issued to one of them said, "This employee is being terminated due to violation of company policy. The employee is gay." Although Cracker Barrel rescinded its policy, the company reportedly has not rehired the fired workers.

Terry Kohler, the chief executive officer of Windway Capital Corporation, and his wife Mary contributed $715,547 to GOPAC since 1985. That includes a $237,000 contribution in 1990 that was accepted in spite of Gingrich's pledge to set a $100,000 ceiling on GOPAC contributions. Terry Kohler is a three-time failed Republican candidate for political office who is best known for his foreign policy views. Returning from a trip to South Africa in 1988, Kohler said blacks there "have no sense of being less, of being a minority, of being downtrodden." Three years later, he had to apologize for commenting that it would be a "disaster" to extend the vote to black South Africans.


Antitrust insecurities

 Another group of GOPAC contributors could use a little help with antitrust and securities laws and regulators. William Flowers and Amos McMullian are, respectively, the founder and president of Thomasville, Georgia-based Flowers Industries . Together they have contributed $83,592 to GOPAC since 1989.

Two federal grand juries subpoenaed records from Flowers Industries and four other large baking companies concerning "the possibility of anti-competitive practices in the bread industry," the Wall Street Journal reported on January 17, 1995. The investigation alleges bid-rigging to ensure well-leavened profits. A Flowers spokesperson told the Journal that the company "considers this activity to be normal antitrust compliance monitoring of the baking industry by the Justice Department."

 J. Morton Davis, chief executive officer of the D.H. Blair & Co. investment bank, has contributed $20,000 to GOPAC since 1993. His investment bank has faced a staggering number of securities violations charges. In recent years, Blair has: paid at least three securities-related fines of $15,000 or more; settled three class action suits charging it with incomplete underwriting registration statements; and been censured by the National Association of Securities Dealers and by regulators in several states.

Joseph Allegra is a former president and Chief Executive Officer of T2 Medical Inc., which provides in-home intravenous medication. Allegra contributed $10,850 to GOPAC in 1992. That same year, the inspector general of the Department of Health and Human Services launched a federal grand jury investigation into T2 Medical practices. The company paid $500,000 to the federal government in 1994 to settle the charges of improper physician self-referral practices.

Kindred spirits

 The rich history of legal scrapes that have haunted the careers of so many GOPAC funders provides insight into Gingrich's perennial calls for "regulatory relief." In this light, the Contract with America's deregulatory mantra can be seen as a shameless attempt by Gingrich and his recidivist clients to take the regulatory cops off of the corporate crime beat.

Those who have committed corporate crimes or peccadilloes may feel a special affinity with GOPAC and Gingrich. Both the PAC and its general chair are embroiled in money-related ethics disputes pending before the House Ethics Committee and the Federal Elections Committee (FEC).

 Gingrich calls GOPAC "the most misunderstood institution in this city," arguing that it is "not a political action committee" but "an educational institution." That claim was rejected by the FEC in 1991, when it forced Gingrich to register GOPAC as a PAC. Such a PAC identity seems consistent with a recent GOPAC fundraising memo that boasts of helping to elect 41 of the 48 House Republican freshmen in the 103rd Congress. The FEC also ruled that GOPAC broke the law by failing to disclose over $500,000 in campaign contributions between 1989 and 1991. Last year, Gingrich's own congressional campaign paid a $3,800 FEC fine for failing to disclose $30,000 in campaign contributions within legally set deadlines. Finally, an FEC suit pending in the U.S. District Court of the District of Columbia charges that GOPAC failed to register as a federal PAC and to disclose those who financially supported its efforts to influence federal elections from 1989 to 1991.

Representatives Patricia Schroeder, D-Colorado, and Cynthia McKinney, D- Georgia, filed an ethics complaint against Gingrich on February 23, 1994. The complaint alleges that Gingrich received a gift worth $150,000 to $200,000 from Glenn R. Jones of Jones Intercable Inc. Jones's Mind Extension University, which reaches 26 million homes via cable television, will run 20 hours of Gingrich's Renewing American Civilization television course, news accounts say.

A Jones spokesperson told a communications trade publication the ethics complaint is "misleading and inaccurate" because the company's arrangement is with the college where Gingrich teaches. "We don't charge any of our participating institutions any money to be on our network," the spokesperson said. Jones is trying to take over the Public Broadcasting System - whose funding Gingrich has vowed to slash.

 When Gingrich requested House Ethics Committee permission to pursue his course in 1993, the committee gave him the green light - so long as he did not use congressional resources for course-related solicitations. In April 1994, however, Gingrich took to the House floor to plug the course, announcing a toll-free phone number for purchasing related audio and videotapes, a self-promotion that was recorded on C-SPAN television. House Minority Whip David Bonior, D-Michigan, filed an ethics complaint on March 8, 1994, charging that this violated a House rule against advertising on the House floor. C-SPAN "isn't the Home Shopping Network," Bonior observed.

 Gingrich's opponent in last November's elections, Ben Jones, filed another ethics complaint about Gingrich's course that is pending before the House Ethics Committee, now called the Standards Committee. Jones charges that Gingrich solicited and employed tax-deductible contributions to fund Renewing American Civilization. The Jones complaint asserts that the course is an arm of GOPAC and violates tax laws prohibiting partisan uses of charitable contributions.

 Ralph Nader and the Congressional Accountability Project filed another complaint against Gingrich on February 6, 1994. The complaint, pending before the Standards Committee, concerns GOPAC consultant Joseph Gaylord. Recent news reports suggest that Gaylord is doing official work in Gingrich's congressional offices. If this is true, Gingrich is violating federal law and House ethics rules by privately financing his official activities. One GOP source told the National Journal that Gaylord "is the overseer of Newt's world Joe helps to select his [House] staff and to fix the payroll."

 When asked about his massive fund-raising machinery and influence-peddling allegations before the November elections, Gingrich had a classic response for the Los Angeles Times. "I raised so much money over the years, from so many different people that I don't owe anyone," he said.

 Perhaps the best tribute to the thoroughness of the GOPAC-Gingrich revolution, however, lies in its penetration of the Standards Committee which will determine whether Gingrich crossed any House ethics lines. Standards Committee member Porter Goss, R- Florida, gave $5,000 to GOPAC last year. Another committee member, Jim Bunning, R- Kentucky, accepted a $1,000 GOPAC campaign contribution in 1979. Even Standards Committee Chair Nancy Johnson, R-Connecticut, contributed $640 to the Gingrich campaign in 1993.