Salon | Swamp Fever

S W A M P   F E V E R   |   B Y   J A M E S   C A R V I L L E

Hypocrites hoist by
their own petard

Guess what? The GOP has a big-time
foreign-money scandal all its own. Maybe now it'll get
serious about cold-turkey finance reform.

in my last Salon column I said that I was fed up with all this campaign finance foolishness. But instead of simply grousing about all the obvious problems with the system, I came out with a reform plan that would, for sure, shake things up in a big way. Under the plan, never again would elected officials be able to take money or gifts of any kind from anyone. Never again would elected officials offer themselves up for sale.
I'm pleased to see that my plan is getting a respectful hearing. In Table Talk, quite a number of y'all agreed that my plan made solid good sense. Even one of my angrier Table Talk detractors wrote that "the Swampfungus ... seemed to be thinking, which is new for him." Thank you, I think.
I've also been hearing from various politicians about the Swampfungus Plan. Last week, two of the biggest backers of campaign finance reform, Sen. John McCain, R-Ariz., and former Sen. Bill Bradley, D-N.J., seemed to like what they heard when I told them about the plan last week. As Bradley put it, with surprising flair, "Once you've got ants in the kitchen, it's near impossible to get rid of them. This plan keeps all of the ants out of the kitchen -- and that is the only thing that will work."
Will my plan pop up on the floor of Congress any time soon? Not likely. But I'll tell you this: The momentum for meaningful reform is building. And recent revelations ought to give the movement a major jolt.
It seems, you see, that the Republicans have an ugly foreign-money scandal of their very own. Lo and behold, the role models of rectitude have turned out to be the high priests of hypocrisy.
A couple of weeks ago, most of you probably heard that the Republicans had to hand back illegal foreign donations of $122,400. Compared with the $2.5 million that the Democrats have to return, the Republican sum looks like penny-ante bullshit. But, my friends, that's just the tip of the iceberg.
The story now emerging involves a massive foreign-money-laundering operation that puts the Democrats' shenanigans to shame. In 1993, Haley Barbour, the former chairman of the Republican National Committee who sounds just like Boss Hogg, set up a nonprofit group he called the National Policy Forum and started raking in donations. It was a mighty clever scheme. Claiming that the group was created "exclusively for social welfare" and had no legal connection whatsoever to the RNC, the Republicans were able to raise big bucks from noted "social welfare" groups like the National Rifle Association and Philip Morris without reporting any of it to the Federal Elections Commission. Better yet, as a nonprofit group claiming tax-exempt status, the NPF could raise foreign cash. As long as no one could prove that the NPF was linked to the RNC, foreign donations of any size were perfectly legal.
Well, the chickens are now coming home to roost. The Associated Press recently turned up documents in which the Republicans admit that they were behind the NPF all the way. In one private memo to $100,000 donors, Barbour put it this way: "The RNC is creating the National Policy Forum to help develop and articulate a positive Republican agenda for America and provide a proactive forum for Republican participation at the grass-roots level." Another document shows that Barbour called the NPF "an issue-development subsidiary" of the RNC. The documents could not be more damning. The Republicans have dug themselves into a hell-deep hole.
But wait -- it gets worse. The Associated Press, in another scoop, discovered that earlier this year the IRS denied the National Policy Forum tax-exempt status because of the group's blatantly partisan activities. The ruling is devastating for the RNC. It means (pardon the legal mumbo-jumbo) that instead of being a 501-c tax-exempt organization, the NPF is in fact a Section 527 political committee of the RNC. Under campaign law, all foreign donations, even those received before the IRS ruling, are therefore illegal. Every contribution the NPF has ever received -- foreign and domestic -- must now be disclosed.
Just how much foreign money did the Republicans haul in through the NPF? As recently as March, Haley claimed on "Meet the Press" that "none of the (NPF) money came from overseas ... Period." We know that just ain't so. At the very least, we're talking well into the millions of dollars.
Here's how we know that: In 1994, when the Republicans were in their final push to take back control of the House and Senate, the RNC needed an injection of cash. Enter a Hong Kong company called Young Brothers Development. The company gave its U.S. subsidiary, a shell company with few assets and no listed phone number, $2.2 million in cash. (The president of the "subsidiary," interestingly enough, was Richard Richards, a former chairman of the RNC.) The "subsidiary" then gave the NPF loan guarantees of $2.2 million, allowing the NPF to get credit from a private bank. The NPF, still claiming it had no ties to the RNC, wrote the RNC a check for $1.6 million, repaying some kind of old loan at a very convenient moment in the election cycle.
It doesn't get a whole lot more shameless than that. Every cent of the $2.2 million loan guarantee was, without a shadow of a doubt, dirty money. That dirty money helped buy the GOP's landslide victory in 1994.
Could it have been an innocent mistake? No chance in hell. A Time magazine reporter just turned up a memo that shows, in his words, that "Barbour was advised of plans to seek overseas funds for the National Policy Forum" as early as 1993, a year before the NPF hit up Young Brothers for the loan guarantee. As we learn more, we might find that the $2.2 million from Young Brothers was piddly compared to the size of other foreign donations.
Time and time again, the American people show an ability to forgive the misdeeds of politicians. What they do not and cannot tolerate is blatant hypocrisy. The Republicans will pay dearly for it. At the absolute least, their own foreign money scandal ought to get them off their high horses and over to the negotiating table to talk about real reform. They ain't got no more excuses left.
May 19, 1997

OK, Republicans, are you ready to get on the campaign finance reform bandwagon. Join the debate in Table Talk.