White House: Rove Had No Role in Intel Merger
By Pete Yost
Associated Press Writer
Wednesday, June 13, 2001; 5:34 PM
President Bush's top strategist, who owned more than $100,000 of Intel stock, met in March with the company's chief executive and two lobbyists as they pushed for federal approval of a corporate merger. The administration approved the deal less than two months later.
White House officials said senior adviser Karl Rove referred the computer chipmaker's executives to others in the administration and played no part in the approval. Rove does not recall raising the issue with the president, officials said.
"He offered no advice or counsel with regard to this decision," White House spokesman Dan Bartlett said. Rove, however, continued to be copied in on correspondence from Intel and its trade group until the decision was made in early May, documents obtained by The Associated Press show.
Rove sold all of his stocks last Thursday, unloading a diverse portfolio of holdings in defense, high-tech, energy and banking companies valued at between $1 million and $2.5 million.
Some legal experts said Rove should have removed himself from the discussion with Intel to avoid the appearance of a conflict of interest under federal ethics laws.
"I think Karl Rove has a lot of explaining to do about how this appears," said Mike Gerhardt, a William & Mary law professor specializing in constitutional law issues relating to misconduct in the executive branch of government.
"If this were the Clinton administration and it was somebody who worked for Hillary or Bill, then Karl Rove himself would be denouncing it in the loudest terms possible," Gerhardt said.
Intel chief lobbyist Jim Jarrett said he, another lobbyist and CEO Craig Barrett met separately on March 12 with Rove and Vice President Dick Cheney at the White House. The meetings, requested by Intel, also covered Bush's energy, tax cut and education plans and were "quite useful" in the effort to win federal approval of the merger between one of Intel's U.S. suppliers and a Dutch company, Jarrett said.
The deal required government approval because it involved foreign ownership of a U.S. computer company whose sensitive technology is relied upon by the military.
"I don't know that you can say that any one meeting tips the balance, but certainly when the CEO comes to call and makes this one of his priorities, it demonstrates to him that we think it's important," Jarrett said.
Company executives were unaware Rove owned between $100,000 and $250,000 in Intel stock at the time.
"We don't concern ourselves with that quite often. The world is filled with hundreds of thousands of Intel shareholders," company spokesman Chuck Mulloy said.
Federal ethics laws and rules prohibit an executive official with an economic interest in a decision from participating through recommendations, advice or rulings.
The only way Rove could avoid violating the laws was "if he were truly mute and he offered no comment then or later" on the Intel matter, said Stephen Gillers, a New York University law professor.
Creating a blind trust or divesting months earlier should have been a "no brainer," said Sheldon Cohen, who set up the first presidential blind trust in 1963 for Lyndon Johnson.
"The whole purpose of ethics rules is to avoid the appearance of a conflict of interest, and having even a hint of an appearance problem destroys people's confidence in government," Cohen said.
White House spokeswoman Anne Womack said Rove originally decided last December to sell his stocks in individual companies but then was advised in January by Bush transition counsel Fred Fielding that he should hold off. Fielding suggested the White House counsel's office should obtain a government certificate of divestiture that would allow Rove to defer paying capital gains taxes on the stock sales.
White House officials said the request for the certificate was delayed because the counsel's office was inundated with the work of a new administration – such as arranging security clearances for nominees and developing ethics standards for employees.
During that time, Rove's stock fell about 20 percent and then recovered much of the loss before the sale.
An AP computer analysis of stock prices indicates the stocks that Rove valued on his ethics form last December at between $1.2 million and $2.8 million had dropped in value to between $896,000 and $2.2 million by mid-March. At the time he sold, they were between $1 million and $2.5 million.
"During the time that White House counsel was reviewing Karl's file, Karl did receive multiple ethics briefings explaining the importance of avoiding any conflicts of interest," Bartlett said. "Based on those meetings, Karl avoided any discussions that specifically or materially affected his financial holdings."
Rove's session with Intel wasn't the only one with an industry in which he held a financial stake, according to interviews.
Rove met March 20 in Washington with nuclear power interests to listen to executives' ideas for the Bush energy plan. At the time, Rove held up to $250,000 in stock in General Electric, which has a nuclear energy division.
The trade group that represents GE's nuclear interest attended the gathering, officials said.
White House officials said they believed Rove could participate in "outreach events" – where he might listen to ideas to bring back to the White House – without engaging in a conflict of interest.
In the March 12 meeting with Rove, Intel pushed for the merger of Dutch company ASML and California-based Silicon Valley Group (SVG) to develop the next generation of high-tech machines that churn out computer chips, Intel's main product.
Intel subsequently sent a letter to three Cabinet members responsible for reviewing the merger – Defense Secretary Donald Rumsfeld, Commerce Secretary Donald Evans and Treasury Secretary Paul O'Neill.
The letter was marked "immediate attention requested" and reminded the secretaries that "Intel is the principal consumer" of SVG. The letter copied in Rove, Cheney, White House chief of staff Andrew Card and National Security Adviser Condoleezza Rice.
Three weeks later, the interagency group that included the three Cabinet secretaries approved the merger
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