Monday, June 28, 2004

Rep. Tom Delay, the partisan Republican House majority leader, is a fearless fighter. But even tough guys sometimes move into a protective crouch. Recently, the Texas Republican has been beefing up a legal-defense fund and bracing for a string of legal showdowns that threaten his career.

DeLay, a Fearless Fighter, Plays Defense

Texas Republican Bolsters Legal-Defense Fund Amid State Probe Into Contributions

By JEANNE CUMMINGS, Wall Street Journal
June 28, 2004

WASHINGTON -- Rep. Tom Delay, the partisan Republican House majority leader, is a fearless fighter. But even tough guys sometimes move into a protective crouch.

Recently, the Texas Republican has been beefing up a legal-defense fund and bracing for a string of legal showdowns that threaten his career.

A state grand jury in Texas is investigating whether illegal corporate campaign contributions were made to help Republicans capture control of the state House in 2002 by a political action committee connected to Mr. DeLay, known as Texans for a Republican Majority, or TRMPAC, as well as by the Texas Association of Business, an employers' group.

A round of indictments could be issued late this summer, just months before the November elections, according to an attorney familiar with the proceedings. Mr. DeLay hasn't been informed he is a target of the grand-jury probe, his spokesman says.

Meanwhile, Texas state Democrats, who lost in 2002 to Republicans backed by Mr. DeLay, TRMPAC and the business association have filed two civil lawsuits, charging that illegal corporate donations were used against them. In Washington, U.S. Rep. Chris Bell, a Texas Democrat, has filed an ethics complaint with the House Committee on Standards and Official Conduct outlining the same charges against Mr. DeLay.

Whether Mr. DeLay faces indictment remains to be seen. News that he reactivated a legal-defense fund sent a powerful signal through Washington that trouble could be brewing. According to his financial disclosure report, he raised $53,500 last year for the account.

If he were indicted, Mr. DeLay would have to give up his leadership post immediately, according to House Republican Conference rules. If he were later convicted of a crime, it could end his career. In recent years, former Speakers Jim Wright, a Democrat, and Newt Gingrich, a Republican, both resigned under ethics clouds.

The departure of Mr. DeLay from the House leadership team, even for a short time, could have broad repercussions. It could hamper the leadership's ability to keep Republicans in lockstep, a task Mr. DeLay has mastered by using both threats and incentives. It also could change the dynamics of some congressional races in Texas, where conservative Democrats are struggling to hold their seats after Mr. DeLay's allies in the 2003 state legislature redrew congressional districts and packed them with Republicans. Democrats have claimed the redistricting was unfair and have challenged it in court -- so far unsuccessfully.

It also could further damp contributions from already skittish corporate donors to the Leadership Forum, a tax-exempt committee established by Mr. DeLay to help Republican House candidates. After passage of the 2002 campaign-finance reform law, Mr. DeLay distanced himself from the group, run by former Rep. Bill Paxon, once a senior DeLay aide.

Mr. DeLay and attorneys for the Texas business organization dismiss the investigations as "partisan politics." In a recent meeting with reporters, Mr. DeLay downplayed his association with the two organizations, saying he merely raised money and served "on the advisory board" of Texans for a Republican Majority. "For some reason, particularly in the Texas media, it is like TRMPAC has a last name and it is called Tom DeLay," he says.

The PAC was founded by James M. Ellis, director of Mr. DeLay's leadership political action committee, and was launched, in part, with a $75,000 contribution from Mr. DeLay's leadership committee. Mr. DeLay is chairman of its advisory board, a position highlighted in the organization's fund-raising appeals.

There are signs Mr. DeLay is feeling some heat. This spring he dropped plans to solicit donations of as much as $500,000 for a charity called Celebrations for Children Inc. The charity planned to use the money to pay for a yacht cruise and other parties featuring the majority leader during the Republican Party's New York convention. Any money left over after the convention was to be distributed to children's charities.

The project caught the attention of the New York state attorney general's office and Democracy 21, a Washington watchdog organization that fired off a complaint to the Internal Revenue Service challenging whether the group was a true charity or a political operation. Charity organizers, including Mr. DeLay's daughter, later abandoned the project, saying New York is too expensive.

The investigations began with a boast shortly after the 2002 election in Texas. "The Texas Association of Business blew the doors off the Nov. 5 election, using an unprecedented show of muscle that featured political contributions and a massive voter education drive," shouted the association's newsletter.

The business association spent roughly $2 million on an advertising campaign backing a slate of about 21 Republican candidates who also were backed by Mr. DeLay and the Texans for a Republican Majority. In media appearances, the association's director crowed that corporate money was used to finance the ad campaign.

That brag sent watchdog organizations digging for evidence of other corporate donations. The Texas law banning corporate and union political contributions is tightly written. In addition to prohibiting all corporate and union contributions to candidates, the law forbids outside groups such as TRMPAC from assisting candidates in any indirect way. If those groups accept corporate money, it can be used only for such administrative costs as rent, electric bills and salaries.

An Austin watchdog group called Texans for Public Justice found that TRMPAC's Internal Revenue Service return stated it had raised $1.5 million to influence the 2002 Texas House races, with more than $600,000 coming from corporations. The sum raised eyebrows because TRMPAC had reported to the Texas Ethics Commission less than $800,000 in spending. In the IRS forms, TRMPAC listed payments to telemarketing firms, polling experts and other political consultants, according to Craig McDonald, director of Texans for Public Justice, who filed a complaint with Travis County District Attorney Ronnie Earle, a Democrat, on March 31, 2003.

In the past two years, three grand juries have heard testimony from more than 100 people, including Republican National Committee staff, according to people familiar with the proceedings.

Meanwhile, five candidates defeated by Republicans who were backed by the business association and TRMPAC have filed civil lawsuits challenging the two outside committees' activities. The civil charges could result in hefty fines -- the defendants could receive twice the amount of any illegal contribution or expenditure, plus attorney fees.

The business association, which denies its ads violated state law, has fought the grand-jury inquiry, even taking two appeals to the U.S. Supreme Court.. It lost both times. Mr. Ellis, the TRMPAC director, has resisted testifying in the civil suits. Republicans recently filed a similar complaint of illegal contributions against Texas Democrat Rep. Martin Frost, a charge that Mr.. Earle has added to his investigation.