Bush Strategist's Meeting Questioned
"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.
By Pete Yost
Associated Press Writer
Wednesday, June 13, 2001; 5:45 p.m. EDT
WASHINGTON –– 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
–––
Associated Press Correspondent Brian Bergstein in San Jose, Calif.,
contributed to this story.
© Copyright 2001 The Associated Press
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