Saturday, March 20, 2004

It may be one of the biggest political corruption investigations in Texas since the early 1970s, when the Sharpstown stock fraud scandal led to a major housecleaning of the state's then-Democratic power structure.

Austin District Attorney's Probe Into DeLay's Texas PAC Intensifies Amid Charges of Partisanship

By Gebe Martinez, Congressional Quarterly
March 20, 2004

It may be one of the biggest political corruption investigations in Texas since the early 1970s, when the Sharpstown stock fraud scandal led to a major housecleaning of the state's then-Democratic power structure.

Yet Republicans in Congress say few among them are talking about it, even though the alleged wrongdoing centers on one of the most powerful GOP figures in both Washington and Texas: House Majority Leader Tom DeLay.

"I haven't heard it discussed at all," said House Appropriations Chairman C.W. Bill Young of Florida. "Not a word," offered another senior House Republican.

For the past year, the county district attorney in Austin, Ronnie Earle, has been looking into the alleged use of corporate contributions in state legislative campaigns, which is against state law, in 2002 by the Texas Association of Business and Texans for a Republican Majority Political Action Committee (TRMPAC), a campaign organization created by DeLay.

The Republican silence on the subject on Capitol Hill may be partly out of election-year sensitivity, because DeLay is once again being counted on by his colleagues to raise enormous amounts of campaign cash from corporate America. But some Republicans also maintain that the probe is not yet being taken seriously in Washington because, in their view, it is being conducted by an overtly partisan Democratic prosecutor.

"Most people believe that DeLay is deliberately targeted for a lot of the same reasons that Gingrich was deliberately targeted," said Rep. William M. "Mac" Thornberry, R-Texas, referring to former Republican House Speaker Newt Gingrich of Georgia (1977-99). "If you take out someone you see as central to the party operations, you strike a major political victory."

But the investigation is serious, Earle told reporters March 12, as he made public hundreds of pages of records sought by the Texas Republican Party, which has accused the prosecutor of leaking information about the case to the media. "This investigation is not about Democrats and Republicans. It's about cops and robbers," he said. "This is an investigation of a crime."

The Money Trail

The inquiry centers on efforts by DeLay, the Texas business group and state House Speaker Tom Craddick to gain Republican control of the state House in the 2002 elections. Their success led to the redrawing of the state's congressional map last year in hopes of gaining seven new seats for the GOP this November. (CQ Weekly, p. 94)

DeLay's PAC raised almost $1.5 million in 2002 - about $600,000 from corporations, mostly through their Washington lobbyists. The PAC contributed to 21 state legislative candidates. State law prohibits the spending of corporate or union money directly on campaigns, although a political committee may use such money to cover administrative costs. DeLay's fundraising director, Jim Ellis, and TRMPAC lawyer Terry Scarborough say none of the PAC's corporate contributions were spent illegally.

One matter under investigation is whether the PAC, in effect, illegally laundered its contributions through the Republican National Committee (RNC) last fall. The PAC donated $190,000 to an arm of the RNC that helps state legislative candidates, and soon thereafter that RNC committee wrote checks totaling $190,000 to seven candidates for the Texas Legislature.

No indictments have been returned, although the case will be turned over to a new Travis County grand jury in Austin in April when the current panel's term ends. Neither DeLay nor his records have been subpoenaed, but subpoenas have been issued to DeLay's daughter, Danielle Ferro, and to other close associates of DeLay who helped operate TRMPAC and the House leader's federal campaign committee, Americans for a Republican Majority.

As the probe has picked up speed - coupled with a civil lawsuit by four Democratic state House candidates who lost in 2002 - the inner workings of DeLay's fundraising network, and his personal involvement, are being scrutinized perhaps as never before.

"DeLay was clearly in some, if not all, of the decision-making" by TRMPAC, said Craig McDonald, director of Texans for Public Justice, a public-interest group that has pushed Earle's investigation. Scarborough says DeLay's "involvement was minimal to non-existent with the day-to-day running of TRMPAC."

DeLay's only public comment about the inquiry came in February, when he called Earle "vindictive and partisan" - citing his unsuccessful prosecution 11 years ago of Republican Sen. Kay Bailey Hutchison. (1993 Almanac, p. 69) House Speaker J. Dennis Hastert, R-Ill., echoed DeLay when asked about the probe March 16. Noting the Hutchison case, Hastert concluded, "This is a partisan situation."

One GOP strategist who was involved in Hutchison's defense case maintained that Earle's successes in political corruption cases early in his career were against "underfunded opponents." But this operative, who asked not to be named, noted that "DeLay is not underfinanced."