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Ethics Panel Hands DeLay Second Rebuke in a Week

The decision by the House ethics committee Wednesday to admonish Majority Leader Tom DeLay (R-Texas), the second time the panel has done so in a week, sheds new light on a 2002 incident involving Westar Energy, Inc,. a Kansas-based firm, and efforts by company officials to win Congressional approval of a legislative provision potentially worth hundreds of millions of dollars to the firm.

The Committee on Standards of Official Conduct on Wednesday admonished DeLay in response to a three-part complaint filed by Rep. Chris Bell (D-Texas).

The committee found that DeLay had created “an appearance of impropriety” by attending a June 2002 golf fundraiser with Westar lobbyists after the company had given $25,000 to a Texas political action committee founded by DeLay, as well as donating to DeLay’s re-election campaign. Westar at the time was lobbying for a change in a pending energy bill, and had targeted DeLay as an influential lawmaker who could help it achieve its goal, according to internal company e-mails.

DeLay was also rebuked for using his staff to contact Federal Aviation Administration officials for help tracking down wayward Democrats in the Texas Legislature during a 2003 redistricting battle in the Lone Star State.

Action by the ethics panel on a third allegation by Bell, that DeLay used the same Texas PAC, Texas for a Republican Majority PAC, to improperly funnel corporate contributions to Texas state candidates in violation of Texas law, was deferred in light of an ongoing probe of those charges by Travis County District Attorney Ronnie Earle.

The rebuke comes just days after the committee admonished DeLay and Reps. Candice Miller (R-Mich.) and Nick Smith (R-Mich.) for their actions before and during a controversial November 2003 vote to add a prescription drug benefit to Medicare.

Despite the unanimous decision by the 10-member ethics committee to admonish him on the FAA and Westar charges, DeLay remained defiant and went to great lengths Wednesday to claim victory and point out that the panel had declined to appoint an investigative subcommittee on any of the allegations, as Bell had requested.

“The Ethics Committee has done the right thing in dismissing Mr. Bell’s embellished allegations with bipartisan unanimity,” said DeLay in a statement. After a meeting with several dozen House Republicans last night to shore up his support following the committee’s announcement, DeLay declared, “Admonishment doesn’t even exist in the House rules.”

DeLay and his House GOP allies, including Speaker Dennis Hastert (R-Ill.), also characterized Bell’s complaint as politically motivated, and suggested that Bell had improperly tarnished DeLay’s reputation in his ethics filing by claiming DeLay had taken bribes or illegal gratuities in return for legislative action, allegations not substantiated by any evidence uncovered by the ethics committee.

But some ethics watchdog groups are now calling for DeLay to step down as Majority Leader, and House Democrats, led by Minority Leader Nancy Pelosi (D-Calif.), will ratchet up the political pressure on DeLay during a press conference this morning.

“Members of the Congressional leadership should be above reproach,” said Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington, a liberal watchdog group. “If the Republican Conference wants the American people to believe that it takes ethics seriously, it must insist that Mr. DeLay resign his post as Majority Leader.”

On Westar, Democrats and the outside groups have raised objections for more than a year over the company’s interactions with DeLay and several other GOP lawmakers, including Energy and Commerce Chairman Joe Barton (Texas) and Rep. Billy Tauzin (La.), his predecessor atop that influential panel.

As part of its nearly four-month review of Bell’s complaint, the ethics committee did extensive “fact finding” on the Westar allegations, including obtaining information on the case from DeLay, Barton and Tauzin, as well as several top staffers to the two Texas Republicans and former Westar lobbyists.

In the end, the committee determined that “neither Representative DeLay nor anyone acting on his behalf improperly solicited contributions from Westar … and Representative DeLay took no action with regard to Westar that would constitute an impermissible special favor.”

But the ethics committee found that DeLay and his staff had had extensive contacts with Westar officials and lobbyists following the company’s $25,000 donation to TRMPAC, access that would not have been available without that donation.

In a joint memorandum to committee members from Reps. Joel Hefley (R-Colo.) and Alan Mollohan (D-W.Va.), the ethics chairman and ranking member, respectively, the two lawmakers wrote that the committee “obtained information indicating that [Rep.] DeLay’s participation in and facilitation of an energy company fundraiser in June 2002 is objectionable in that his actions, at a minimum, created the appearance that donors were being provided with special access to Representative DeLay regarding the then-pending energy legislation.”

Westar lobbied Congress for well over a year to include a provision in an energy bill exempting the company from tighter regulation under the Investment Company Act, which covers mutual funds, if lawmakers decided to deregulate the nation’s electricity market. The investment law would have come into play because of Westar’s decision in 2000 to restructure itself, due in part to the acquisition of nonutility businesses such as home security alarm firms during the decade before and the resulting debts from those purchases. Westar wanted to split into two companies, one a regulated utility carrying most of the company’s debt, and the other a private-sector firm with only modest debts, able to explore new businesses. Hundreds of millions of dollars were potentially at stake if Congress deregulated electricity markets but didn’t exempt Westar from the ICA.

Beginning in June 2001, a Westar lobbyist, Richard Bornemann, met with Barton to discuss the company’s proposal, and in September 2001, Barton included the provision in electricity legislation he was then circulating and later formally introduced.

In August 2001, the House passed energy legislation, but it didn’t include the Westar provision or repeal of the Public Utilities Holding Company Act, the larger change in federal law that would have threatened Westar’s subsidiary with tougher federal regulation.

But a Senate version of the energy bill adopted in April 2002 had both PUHCA repeal and the Westar provision, which was “grandfathered” in along with the PUHCA initiative, and Westar wanted to make sure its proposal survived a House-Senate conference on the energy bill.

By April 2002, Westar officials were scrambling to find ways to improve their overall political profile in Washington, according to the Hefley-Mollohan report, and had developed a strategy to do so, including targeting members of the GOP Congressional leadership for campaign donations.

That effort was detailed in a memo that month by Bornemann, an outside lobbyists hired by Westar, and according to Hefley and Mollohan, the Bornemann memo “does not tie that [donation] program to the provision that Westar was seeking in the then-pending energy legislation.”

However, a May 20, 2002, e-mail from Doug Lawrence, then Westar’s vice president for public affairs, based in part on Bornemann’s proposal, did appear to link the fate of the company’s legislative provision to campaign contributions.

“Right now, we are working on getting our grandfather provision on PUHCA repeal into the Senate version of the energy bill,” wrote Lawrence to another Westar executive. “It requires working with the Conference Committee to achieve. We have a plan for participation to get a seat at the table, which has been approved by [David Wittig, Westar’s former chairman, president and CEO] the total package will be $31,500 in hard money (individual) and $25,000 in soft money (corporate). Right now, we have $11,500 in immediate needs for a group of candidates associated with Tom Delay [sic], Billy Tauzin, Joe Barton and Senator Richard Shelby (R-Ala.).”

Shelby was described as “our anchor on the Senate side.”

Lawrence, who is no longer with Westar, added: “Delay [sic] is the House Majority Leader. His agreement is necessary before the House Conferees can push the language we have in place in the House bill.”

Slightly more than one week later, Westar gave $25,000 in soft money to TRMPAC, a donation that allowed two company representatives to attend a golf fundraiser with DeLay the following month at The Homestead Resort in Hot Springs, Va.

That event had been set up by a former DeLay aide, Drew Maloney, who in March 2002 had left the Texas Republican’s office to become a lobbyist.

Maloney had handled energy issues for DeLay, and attendance at the June golf outing was limited to executives from five energy companies, including Westar.

Two staffers in DeLay’s leadership office Jack Victory, who took over for Maloney on energy issues, and Carl Thorsen, his counsel also attended The Homestead event.

While Bell’s complaint suggested that DeLay had improperly solicited the Westar contribution to TRMPAC, Hefley and Mollohan determined that was not the case. “In sum, the information we have obtained does not indicate that Representative DeLay or anyone acting on his behalf solicited campaign contributions from Westar in an improper manner,” Hefley and Mollohan wrote.

But during the June 2-3, 2002, event at The Homestead, Lawrence and another Westar official twice personally told DeLay of their desire to get a provision in the energy bill affecting their company, according to testimony given to the ethics committee by their lawyer. Lawrence also gave a DeLay aide a “briefing book” the company had put together on the issue.

DeLay, when asked about those conversations by the ethics committee, did not answer the question directly of whether he spoke to Lawrence, and said none of his aides could recall any such discussions with Lawrence or receiving any Westar materials.

In a June 25, 2002, memo on the need for further campaign contributions from Lawrence to other Westar officials, Lawrence wrote: “Right now, we have made significant progress with House Majority Whip Tom Delay [sic] and [then] Energy Subcommittee chairman Joe Barton. The contributions made in the first round were successful in opening the appropriate dialogue.”

Bornemann, Westar’s outside lobbyist, then wrote to DeLay’s office on June 28, 2002, seeking a meeting between DeLay and David Wittig, then the head of Westar.

In his letter, Bornemann “noted Westar’s participation in The Homestead fundraiser” when placing his request with DeLay’s office. That meeting eventually took place on Sept. 25, 2002, as the House and Senate were trying to hash out the final details of the energy package. According to Lawrence, DeLay told Wittig at that time that “there was no certainty that Westar’s provision” would be in the final energy bill.

While Westar lobbied DeLay behind closed doors, Tauzin and Barton were openly pushing for the company’s provision.

On Sept. 13 and 18, 2002, Tauzin and Barton circulated to the Senate draft electricity deregulation bills that included the Westar provision.

Then, on Sept. 19, Rep. Edward Markey (D-Mass.), who was also on the conference committee, introduced an amendment to strike the Westar provision from the House offer. Barton spoke in “mild opposition” to the Markey amendment, and it was defeated.

However, on Sept. 27, the roof fell in on Westar. The company disclosed that Wittig and other top Westar officials were being investigated by the U.S. Attorney’s office in Topeka, Kan., and that subpoenas had been issued by a federal grand jury. The Securities and Exchange Commission was also looking into the company’s activities.

The investigation focused on a number of allegations against Wittig and another top Westar official, Douglas Lake, former executive vice president.

The two men now each face 40 federal charges, including conspiracy, wire fraud and falsification of records, and federal prosecutors are looking to recover more than $30 million from the pair.

Wittig and Lake have denied the charges, and their trial could start next week.

On Sept. 30, 2002, Westar’s announcement of a federal investigation of its CEO and executive vice president was sent to all conferees on the energy bill, as well as a letter from the Kansas utility regulators opposing the Westar provision. Kansas regulators claimed Westar was just looking for Congress to help it shift its corporate debts onto the citizens of Kansas, who could have ended up paying hiring electricity rates.

Faced with a barrage of negative publicity, Barton decided to drop the Westar measure from the legislation.

That same day, Lawrence sent an e-mail to Wittig stating: “The Delay [sic] staff has asked us to release people from their commitment to support our provision.”

DeLay and his aides told the ethics committee they were “not aware” or could not remember any such commitments made to Westar by any Members or staff, including DeLay himself.

In their informal investigation of DeLay and Westar, Hefley and Mollohan found that “neither [DeLay] nor any member of his staff took any action with regard to that provision other than engaging in meetings and other communications with representatives of Westar.”

But the two were clearly concerned that DeLay took part in the June 2002 fundraiser at The Homestead just as the House-Senate talks on the energy bill were set to begin, and Hefley and Mollohan noted that DeLay himself was a conferee and thus in a “strong position” to influence the negotiations in favor of Westar.

In addition, Hefley and Mollohan pointed out that the ethics committee had warned DeLay to be more careful back in 1997 when it dismissed a complaint against him alleging special treatment he reportedly gave to those donors who had given to Republicans.

“The focus in the present matter is not so much on the statements made by Representative DeLay, but more on actions he took i.e., his action in facilitating and participating in the energy company fundraiser that raise the very same concern expressed in that earlier Committee statement,” Hefley and Mollohan wrote.

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