"Congressmen are not bribed anymore. They simply have a lot of friends
who are willing to help them out whenever they find it necessary."
--Newt Gingrich, candidate for Congress, 1974
by David Beers
The too-generous help of influence-seeking "friends" and shady dealings
regarding a book eventually hung Speaker Jim Wright. Now, the same
elements may prove Newt Gingrich's undoing. In late July, the House
Ethics Committee was preparing to launch an official investigation of
Gingrich.
Then in early August, the picture darkened still further for him.
Representative Bill Alexander, a Gingrich foe, sent a letter to the
committee alleging he had evidence of "over two hundred" instances of
potentially unethical practices-including illegal campaign contributions
and a "questionable" real-estate deal.
A primary object of the committee's scrutiny so far is the unorthodox
deal Gingrich constructed to promote his 1984 book Window of
Opportunity. When his publisher deemed the work not marketable enough to
warrant a hardcover run and extensive promotion, Gingrich created a
private partnership, COS Limited, managed by his wife Marianne.
Twenty-one donors, most of them wealthy businesspeople or influential
Republicans, including beer baron Joseph Coors, kicked in $5,000 each
for advertising and a Gingrich book tour. Publisher Jim Baen then agreed
to print the book in hardcover as well as paperback, ensuring Gingrich
the higher royalties possible from hardcover sales.
Marianne Gingrich was paid $11,500 by the partnership, and the
Gingriches have netted $24,036 in royalties-on sales of only 29,000
copies. Baen has said he knows of no similar deal in the publishing
industry; Gingrich has termed it "weird," but defends it as a straight
business venture.
Gingrich's critics read it differently, charging that the $5,000
contributions were illegal gifts. Some of the partners have indicated
that giving Gingrich exposure, not making money, was their main
motivation. "It was a soft investment," local developer Joel Cowan told
Michael Hinkelman of the Atlanta Business Chronicle. "The reason I got
involved was because I wanted to help disseminate his [Gingrich's]
ideas." COS Ltd. lost more than $100,000 during the book's first five
years, and partners got tax write-offs, which may be illegal. According
to the tax publication Highlights & Documents, "If the point of the book
was to promote Gingrich's career, then the expenses of promoting it
could be classified as political campaign expenditures," which are not
tax-deductible.
Window of Opportunity investors and their family members also
contributed at least $60,000 to Gingrich congressional campaigns between
1978 and 1988. And some of them have bid on or received federal
contracts. One question certain to be uppermost in the minds of the
ethics committee: Didn't many partners join his high-risk venture simply
because he was in a position to sway legislation to their benefit? "This
was no riskier than a Broadway play," asserts Gingrich. "I'm a public
celebrity ... so is William F. Buckley. William E Buckley routinely
raises a lot of money for National Review every year without any
legislative influence."
So they invested in the book because Gingrich is a celebrity, not
because he is a congressman? "That's right," Gingrich replied.
Long before Gingrich could call himself a celebrity, however, he raised
$13,000 for another book. In 1977, after two losses, Gingrich was
gearing up for a third, successful run for Congress, but was snapped for
cash, say those close to him at the time. A group of prominent
Republican businesspeople formed a limited partnership to advance him
the money to write a novel about the Russians invading Europe. Gingrich
used the $13,000 to take his family on research trip to Europe, but he
never produced a complete manuscript. Gingrich says this, like the COS
partnership, was an aboveboard venture that didn't work out; he simply
found out he was no novelist.
The deal for the 1977 novel "was nothing more than a sweetheart
arrangement by a select group of Newt Gingrich's wealthy friends,"
charges Arkansas Representative Beryl Anthony, Jr., chairman of the
Democratic Congressional Campaign Committee (DCCC). "After eleven years
and no book, now appears the real objective of this business partnership
was to allow Gingrich a means financial gain not available to the
average American."
For a self-styled champion of entrepreneurship, Gingrich's own ventures
tend to raise more accusations than money. Last year, the DCCC charged a
Gingrich-headed political action committee, Conservatives for Hope and
Opportunity (CHO), with mail fraud. An April 1986 direct-mail piece
signed by Gingrich assures previous donors, "Your gift has been put to
work helping CHO fund conservatives running for the House of
Representatives in this year's election," then hits up the reader for
more money. In fact, while CHO raised $217,868.80 from March 1985
through June 30, 1987, only $900.00 was spent on direct contributions to
candidates. The rest was spent on direct mailings, fees for consultants
and vendors, and travel for Gingrich.
On January 31, 1988, nine days after the DCCC filed its charges, CHO
told the Federal Election Commission that because it "is now obvious
that CHO cannot get out of debt," it had ceased fund-raising. That
averted an investigation, but Anthony is convinced Gingrich and his PAC
knowingly bilked the public. CHO treasurer Robert Weed has admitted, "We
realized about the middle of 1986 that we were going to crash." Asks
Anthony, "If they knew CHO was a failure in mid-1986, why did they
continue to make claims to donors that their money was going to
candidates?" Gingrich's defense: "Everything we did was clearly, without
any question, within the normal pattern of American politics." |
