Thursday, September 23, 2004

Grand juries impaneled next week will continue the investigation into corporate money and 2002 Republican races, and the campaigns waged by House Speaker Tom Craddick and the Texas Association of Business are expected to be high on their agenda.

Speaker Craddick, business group expect grand jury scrutiny

Fund-raising inquiries may extend to both; they deny wrongdoing

By CHRISTY HOPPE / The Dallas Morning News
Thursday, September 23, 2004

AUSTIN _ Grand juries impaneled next week will continue the investigation into corporate money and 2002 Republican races, and the campaigns waged by House Speaker Tom Craddick and the Texas Association of Business are expected to be high on their agenda.

The lawyer representing both entities said they have done nothing illegal, and he expects no indictments. But he does believe the grand juries will continue to look at his clients.

District Attorney Ronnie Earle on Tuesday announced 32 indictments against three fund-raisers connected to U.S. House Majority Leader Tom DeLay and eight companies. Prosecutors are looking at hundreds of thousands of dollars in donations from corporations.

The money fueled a Republican takeover of the state House for the first time in 130 years and led to the election of Mr. Craddick as speaker and his subsequent push for a GOP-produced congressional redistricting plan.

It is a felony in Texas for corporate money to be used for political purposes.

Mr. Earle, who has subpoenaed extensive records from Mr. Craddick and the business association, made it clear that the grand jury work was not done.

"There are a number of allegations that arose as a result of the 2002 elections. We continue to investigate various of those allegations," he said. "Anyone who has committed a crime is a target."

Craig McDonald, executive director of Texans for Public Justice, filed the original criminal complaints that are at the heart of the grand jury investigation. He said he expects the Texas Association of Business and Mr. Craddick to be indicted.

"I don't think it's going to stop here," Mr. McDonald said.

He said he "would be surprised" if the TAB and Mr. Craddick did not "face some indictments in the months to come."

Allegations against the speaker and the TAB have unfolded in the last year, some through civil lawsuits brought by losing candidates that raised many of the issues also being explored by the grand jury. Others have been unearthed through newspaper reports and court hearings.

What the facts have shown so far is that a group of business- or Republican-affiliated organizations raised more than $2.5 million in corporate donations and used the money for ad campaigns, polling, political consultants, phone banks and fund-raisers.

One of the leading organizations was Texans for a Republican Majority, a political action committee established and supported by Mr. DeLay. It raised $600,000 in corporate dollars, and indictments allege that its director, John Colyandro, and eight large businesses knowingly used many of those donations for prohibited political purposes.

At the same time, Mr. Craddick was a longtime House member working to win a Republican majority so that he might be elected speaker by the House membership.

State law prohibits any outside influence in a House speaker's race; it also bars speaker candidates from enticing support by offering anything of value to members who will be voting.

Among the actions that appear to connect Mr. Craddick to the TRMPAC operation:

"In October 2002, TRMPAC mailed Mr. Craddick $152,000 worth of checks to 14 candidates. The money had been raised from individuals, not corporations, and therefore could legally be given directly to candidates. But TRMPAC chose Mr. Craddick to deliver the largesse to the potential House members.

Roy Minton, Mr. Craddick's attorney, said delivering checks did not qualify as a "thing of value." And, he said, all the candidates who received the checks had "pledged to him [Mr. Craddick] long before then."

"Also in October 2002, Mr. Craddick passed along a $100,000 corporate check made out to TRMPAC and donated by The Alliance for Quality Nursing Home Care Corp., among the firms indicted Tuesday on charges of making an illegal contribution to TRMPAC.

Such a donation would be illegal in Texas if the business knew the money would be spent for political purposes. A spokesman for the alliance said the group thought the money would be spent on administrative expenses.

Mr. Minton said Mr. Craddick was just serving as a conduit for a Republican cause. "I don't know how in the world he would know how it's going to be spent," Mr. Minton said.

"TRMPAC records show that in interviews with Republican candidates in the primary, notes were taken on whether they supported Mr. Craddick in the speaker's race.

"In the months immediately before and after the November election, Mr. Craddick spoke 92 times with the political coordinator for TRMPAC, according to phone records.

Mr. Minton said that his client was interested in politics and was just catching up on events.

Mr. McDonald said he believes TRMPAC was helping Mr. Craddick in the speaker's race and that he helped direct their operation. "It's a stretch of the imagination to say that Craddick didn't know the corporate and hard money aspects of TRMPAC. If he didn't understand, he's the least curious man in politics," Mr. McDonald said.

The issues surrounding the business association are separate. The TAB raised $1.9 million from undisclosed corporate donors and poured the money into 89 political mailings in the same House races targeted by TRMPAC.

The ads generally blistered the Democratic candidates by name, calling them anti-business and anti-education, while praising the Republican candidates.

The TAB contends that the statements constituted "issue ads" that are protected free speech and do not fall under corporate spending prohibitions.

Issue ads are protected only as long as the group does not coordinate its activities with other groups or candidates.

Mr. McDonald said that the TAB and other groups, such as Texans for Lawsuit Reform, shared advertising costs, strategy and even opposition research costs for private investigators.

"I think it has some potential legal vulnerabilities. It's a legal defense that is likely to break down when the coordination becomes clear," he said.

Also at issue is whether the ads crossed the line and were more political advocacy than issue ads.

Mr. Minton, who also is the lawyer for the TAB, said, "There was no coordination. I'm satisfied of that."

He also said the law on free speech, corporate spending and political advertising "is up in the air," but there was no clear prohibition at the time of the TAB ads.