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12 December 2005

Pssst. How much to buy Washington?

The US capital is swarming with lobbyists who are paid absurd sums to do shady deals with elected po

By Andrew Stephen

Please bear with me while I briefly explain why I became interested in the subject of this report. Not long after I moved to Washington 16 years ago, I started to wonder how on earth so many people I knew lived such lavish lifestyles. Like many in middle-class DC, they were often lawyers who also had political links of some kind, but I was never sure exactly what they did. And it mystified me that their lifestyles never seemed to reflect what even highly successful lawyers earn: they would move into ever-bigger mansions, fly in private jets to St Barts for weekends, and so forth.

It took years before the penny dropped. This article is an attempt to explain why limitless money sloshes around Washington – and why, as a result, we are heading for one of the biggest political and financial scandals here in history. It is about how government itself is for sale and is selling more lucratively than ever under President George W Bush. People will start to go to prison as the scandal unfolds. Two Senate committees, four congressional subcommittees and no fewer than 12 separate FBI investigations are involved. Can you actually buy access to Bush? If so, what is the going rate? Please read on.

The people who fascinated me were – and are – lobbyists, though they never use that word. The rationale for their existence is simple. America has a population of 300 million and the biggest economy in the world; it is money that makes the country go round, so there are fortunes to be made.

But there are laws and regulations that govern how these fortunes can be amassed, and these laws are largely made by politicians in Washington. Ergo, every year ambitious individuals and companies put hundreds of millions of dollars into the hands of DC lobbyists – whose role, by means fair or foul, is to get the politicians to change or keep those laws so that even greater fortunes can be made.

Take the case of Michael Scanlon, a 35-year-old preppy Republican who was still paying off college loans just five years ago. In 1998 he got a job as deputy press secretary to Tom DeLay, erstwhile leader of the Republicans in the House – the type of junior congressional job that is so low-paid that one young female staffer revealed not long ago that she resorted to prostitution to make ends meet. Young Scanlon helped DeLay and the Republicans campaign for the impeachment of Bill Clinton, but in 2000 left to become a lobbyist.

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He kept – how can I put this without offending the lawyers? – well, actively in touch with the likes of DeLay. Before long he had spent several million dollars on a luxurious house in Re-hoboth Beach in Delaware, but because that is not within commuting distance of DC he also rented a $17,000-a-month suite at the Ritz-Carlton hotel. Last month Scanlon was charged with conspiring to “corruptly offer and provide things of value, including money, meals, trips and entertainment, to federal public officials in return for agreements to perform official acts”. In a plea agreement in which he is already naming names to investigators – dozens of people from lowly apparatchiks to senior White House figures are quaking as a result – he has agreed to pay back (wait for this) $19.5m from the fortune he had amassed.

In the first term of this Bush administration, the number of registered lobbyists such as Scanlon went up from 16,342 to 34,785. DeLay made it clear when Bush took office that they would have to be registered Republicans, too, before they could have access to the Republican politicians then starting to monopolise power not only in the White House but also in the Senate and House – a one-party domination that had not existed in Washington for decades. And what DeLay ordered, happened.

Let me now switch briefly to the case of Randy “Duke” Cunningham, an eight-term Republican from California who resigned tearfully from the House of Representatives at the end of November after confessing to having taken bribes worth $2.4m, including a Rolls-Royce, a yacht and a $7,200 Louis Philippe commode. I will give just one example of how he operated. A defence contractor wanted to land a huge Pentagon contract and needed the influential Duke, a member of the House appropriations defence subcommittee, to intervene with a top procurement official there, so a lobbyist working for the contractor bought Duke’s Del Mar house for nearly $1.7m, and then sold it nine months later for its real market price of $700,000 less. Duke thus landed a $700,000 bribe, having intervened with the Pentagon and enriched a defence company with hundreds of millions of taxpayers’ dollars.

Which brings us to 48-year-old Jack Abramoff, a name we will be hearing a lot more in 2006. Not long ago, DeLay described Abramoff as “one of my dearest friends”. I have never met him, but he seems to have been just like those I described: though he appeared to have no clearly definable job, he flew around in private jets and had a $139,000 BMW, which he paid a chauffeur $69,000 a year to drive. He has been at the heart of the Republican establishment for decades, ever since becoming chairman of the College Republican National Committee in 1981; Karl Rove was a predecessor, and a man called Ralph Reed, later director of the highly influential Christian Coalition that helped bring George W Bush to power, slept on his floor as a student.

How can I begin to describe Abramoff’s complex webs? He was only a middling figure in the power hierarchy but was a lobbyist’s lobbyist who knew the levers of power in Washington. Virtually limitless dollars sloshed his way to push and pull those levers, and now he is the object of too many investigations to list.

I will limit myself to describing briefly how he operated, and for whom. He spent $1m a year just on entertaining politicians and government officials at football, basketball and ice-hockey matches; he owned a stylish Washington restaurant called Signatures, specifically so that movers and shakers could eat and drink lavishly there without having to pay; he took the potentially most useful of these away for profligate weekends at what is invariably described here as the “fabled” golf course at St Andrews in Scotland.

DeLay, himself indicted for relatively minor campaign finance fiddles but facing much more serious investigations, went on one such trip in 2000. Members of his staff and his wife were included; it cost $100,000 – and Abramoff even threw in an audience with Margaret Thatcher in London. Because politicians are legally barred from accepting money or trips from lobbyists, Abramoff arranged for the junket to be funded by the Capital Athletic Foundation, a largely notional organisation through which he funnelled slush money from clients.

Congressman Bob Ney, a 51-year-old Republican who represents Ohio – we will come to him in a moment – also enjoyed the Scottish golf links. So did David Safavian, a 38-year-old Bush appointee who only weeks ago was administrator of the Office of Federal Procurement Policy in the White House – a post so powerful that, to give just one example, his office was involved in deciding how the government’s billions of dollars of Hurricane Katrina aid should be used. He resigned when his involvement with Abramoff came to light recently, and three days later was indicted on five counts of lying about his trip to St Andrews.

You almost weep when you realise the sorts of people who were providing the funds to Abramoff to do all this. They invariably ended up as victims, too. Abramoff realised years ago that Native American tribes, for example, were potential gold mines because they were able to run legal gambling on their protected lands; it was one of their few sources of income and they desperately needed Washington to see things their way. Between them, Abramoff and Scanlon accepted $82.5m from the tribes in 2000-2004, $32m from the 850-strong Coushattas of Louisiana alone. The pair left a trail of e-mails that showed contempt for their clients (“monkeys . . . troglodytes . . . idiots”) as well as glee: “I want all their money,” Scanlon wrote. “Weeez gonna be rich!!!”

They duly set up a front organisation called the Council of Republicans for Environmental Advocacy, or CREA, and gave half a million dollars to a lady named Italia Federici to run it. Abramoff chose her, he told Scanlon in an e-mail, because she had “juice” with the Bush administration’s Department of the Interior, which regulates Native American tribes.

She soon became particularly chummy with the department’s then number two, a senior Bush political appointee named J Steven Griles – so much so that Abramoff tried to persuade him to leave to become a lobbyist for Native American tribes himself; he would, after all, have had excellent contacts in government. Griles declined that offer but has since left the administration to strike out on his own; last month he was accused by the former chief counsel of the interior department of attempting to do Abramoff’s bidding on behalf of the Coushatta tribe (which Griles denies).

This is where Ralph Reed, Abramoff’s old student buddy, plays a walk-on role. He did not register as a lobbyist in Texas after leaving the Christian Coalition, but nevertheless received a tidy $4.2m from Abramoff and Scanlon – all supposedly to push for the closure of casinos operated by the tribes that were rivals to those the lobbyists represented. He had strong Republican links which, the tribes were led to believe, he would use on their behalf. But most of the $82.5m the tribes paid vanished, and Scanlon is now charged with conspiring to defraud them.

Abramoff, meanwhile, also had overseas clients. The Northern Mariana islands in the western Pacific, for example, consist of 14 islands with a population of 80,000 who are US citizens but do not vote; formerly part of the UN Trust Territory of the Pacific, the islands abide partly under US laws and partly independently. Abramoff was hired to promote their garment industry, sweatshops owned largely by American businessmen but manned by cheap labour brought in from China and elsewhere.

The beauty of all this for the Americans was that the sweatshops were possible because the islands were not subject to US employment laws, yet the clothes made there could legally bear “Made in America” tags. It was a loophole worth countless millions. DeLay was flown to the idyllic Pacific islands three times in 2003-2004 to see for himself why the laws should not be changed, which some were advocating. He flew in corporate jets owned by one Brent Wilkes, a lobbyist crony of Abramoff who happened to be a benefactor of Duke Cunningham and dozens of other congressmen yet to be named. Wilkes was also a “patron” of the Bush re-election campaign last year, meaning that he raised at least $100,000 for the 43rd US president.

I could go on more about Wilkes, but let us stay with Abramoff and friends. Before joining the Bush administration, Abra-moff’s golfing partner David Safavian was a registered lobbyist for Omar Bongo, long-time president of the central African state of Gabon. In 2003, with Safavian no longer a lobbyist but now in the White House, Abramoff wrote to Bongo to say he could get him an introduction to the US president for a fee of $9m. He even offered to fly to Gabon after that year’s St Andrews golf junket “with the congressmen and senators I take there every year”. Whether that $9m was ever paid, and if so to whom, is still unclear; what is irrefutable is that, ten months later, President Bongo was ushered into the Oval Office to meet President Bush.

The first of what will be many court hearings for Abramoff starts on 9 January, when he will be accused with a business partner named Adam Kidan of fraud over their $147.5m purchase in 2000 of SunCruz Casinos – a Florida company which ran casino ships that sailed out of US waters and thus circumvented gambling laws. The pair bought the business from a man named Gus Boulis; the following year, Boulis died in a hail of bullets in a Mafia-style hit as he sat in his car. Four months later SunCruz went bankrupt and three men have since been charged with Boulis’s murder. It should be stated there is no suggestion that Abramoff or Kidan was involved.

Let us not forget Congressman Bob Ney. He not only went golfing at St Andrews but was also among those who flew to investigate the garment industry in the Pacific islands; he has represented the people of Ohio on Capitol Hill since 1995 and is even chairman of the committee on House administration.

That is why many were puzzled when such a distinguished congressman from the Midwest should have gone out of his way to condemn a relatively unknown Florida businessman such as Boulis as a “bad apple” before the SunCruz deal; then, after $10,000 from the new SunCruz owners came his way, Ney had it read into the Congressional Record that the equally obscure Kidan enjoyed “a renowned reputation for honesty and integrity”.

Congressman Ney also intervened to help the casino owned by the Tigua tribe, which Abramoff represented. “Just met with Ney!!!” Abramoff e-mailed Scanlon. “We’re fucking gold!!!!” Ney explains now that he was naive, not corrupt; but he will almost certainly soon have to tell that to the judge, as will many others.

The point of all this is that Abramoff and Scanlon, as lobbyists, were merely careless in leaving their trails of incriminating e-mails; Cunningham, as a politician, was equally stupid to drive around Rancho Santa Fe in his Rolls-Royce and move into a new $2.5m house when he had no visible means of support other than his $158,000 salary. Those are the only reasons they were caught doing what countless others do, too. Because Scanlon is helping investigators to incriminate others, he faces only a five-year prison sentence and a $250,000 fine. If Abramoff does the same, the results will be positively explosive.

But enough is being unearthed even without Abramoff’s co-operation to nail dozens of congressmen, staffers and even White House officials – going deep, in other words, into the heart of the Republican establishment and the Bush administration itself. Figures obtained by the Centre for Public Integrity show that between 1999 and 2004, 620 White House officials took $2.3m worth of trips organised by 216 companies or individuals. Proving quid pro quos – that policies were changed by politicians or officials because they were recipients of largesse – is notoriously hard for prosecutors; but now the justice, interior and treasury departments and the Internal Revenue Service, plus a grand jury, are among those sifting through evidence.

You end up laughing or crying over the brazenness of it all. The other day, DeLay (“Tommy” to Bush) flew to Texas for his arraignment using a jet supplied by the R J Rey-nolds Tobacco Company. Meanwhile Conrad Burns, chairman of the Senate appropriations subcommittee and one of those politicians close to Abramoff – I am thinking of the lawyers again when I use that word – managed to secure a $3m federal grant for the Saginaw Chippewa tribe in Michigan, even though he represents Montana.

The net will soon be cast over Democrats, too. Senator Byron Dorgan, a Democrat from North Dakota, held a fundraising party in accommodation provided by Abramoff, as well as receiving at least $95,000 in campaign contributions from Native American tribes; he admits that in 2003 he intervened on behalf of one tribe in Massachusetts, but he strenuously denies any wrongdoing.

His case is more surreal than most: he is vice-chairman of the Senate Indian affairs committee, which has been actively investigating corruption involving the tribes.

I could go on. The list of people being investigated gets longer every day. Handcuffs are waiting. In the meantime, have I explained why we are heading for a major financial and political scandal? And why so many people I know in Washington have such mysteriously extravagant lifestyles?

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