Deaver Trial Offers Window on Inner Circle Power-Brokers

The perjury trial of former White House aide Michael K. Deaver, now in its second month, is providing a captivating look inside the rarefied world of high-level Washington power-brokering.

In the spotlight is a man who had the ultimate lobbying asset to sell--access to President Reagan’s inner circle--and who eagerly collected fees that vastly outstripped his old government salary.

Deaver’s access was unquestioned. He had served Reagan for 19 years, starting with Reagan’s two terms as California governor, and his wife, Carolyn, was personally close to Nancy Reagan. At the White House, his bureaucratically unimpressive title--deputy chief of staff--belied his role as the keeper of the Reagan image, the man who, said former Budget Director David A. Stockman, busied himself with “stage-managing” the presidency.

After resigning from the White House in May, 1985, to set up his own public relations business, Deaver became a fast-moving quick-fix artist who tried to put in the right words for his clients with top officials, according to evidence presented in the courtroom of U.S. District Judge Thomas Penfield Jackson. Prosecution witnesses said that phones in Deaver’s old colleagues’ offices promptly began to ring.

Special Tax Breaks

Deaver urged Robert C. McFarlane, then Reagan’s national security adviser, to support U.S. firms that wanted to keep special tax breaks for doing business in Puerto Rico, according to testimony. Deaver dropped in on Secretary of State George P. Shultz to discuss the same deal, and he contacted John M. Poindexter, who succeeded McFarlane, to smooth the way for a Korean envoy who wanted a personal audience with the President.

In one particularly impressive show of influence, Deaver gave an investment banker a special White House phone number to call him back aboard Nancy Reagan’s aircraft.

Some past and present government officials--including McFarlane, Shultz and Poindexter--have testified about their contacts with Deaver. Whitney North Seymour Jr., the court-appointed independent counsel who is prosecuting the case, said that Deaver made “hundreds of thousands of dollars . . . for a few phone calls and contacts.”

But illegal lobbying is not the criminal charge that Deaver faces. Although a post-Watergate law prohibits lobbying of former colleagues, Seymour determined that its restrictions did not apply in Deaver’s case because his White House office was sufficiently distanced in the bureaucracy from those of the officials whom he lobbied.

Rather, Deaver stands accused of five counts of lying to investigators last year in a vain effort, as described by Seymour, “to cover up what he had done.” He gave sworn statements to Seymour’s grand jury and a congressional subcommittee that he did not recall lobbying such officials as McFarlane, Shultz and Poindexter. If convicted, he faces maximum punishment of 25 years in prison and $34,000 in fines.

Deaver has not yet testified in his trial but is expected to do so. His lawyers, who have not yet presented their case, have said they have medical evidence that they hope will persuade jurors that their client never intentionally lied, only that his memory was impaired by bouts with alcoholism.

Perjury aside, the five-week-old trial at which more than 40 witnesses have appeared has provided fascinating glimpses into the attempt--and ultimate failure--of a long-time close confidant of the Reagans to parlay that friendship into a fortune.

As he was making plans to resign from the Administration, Deaver, whose government salary was $75,000, consulted some friends, including Washington attorney Kenneth A. Lazarus, jurors have been told.

$500,000 a Year

Deaver had been offered $500,000 a year by an established Washington public relations firm, Lazarus said. But Lazarus advised Deaver that he could easily make more if he started his own firm.

For Deaver, who had played the piano to put himself through San Jose State College in the late 1950s, the advice was highly gratifying, Lazarus testified.

Within days of his departure from the White House on May 10, 1985, Deaver opened an office and signed up to do lobbying for the government of Canada, including work on the acid rain problem, for $105,000 a year, other witnesses said.

At about the same time, he obtained a $250,000 contract from Trans World Airlines, which wanted him to persuade the Transportation Department to help TWA combat a takeover attempt, and a $200,000 fee agreement from the Smith Barney investment firm, which wanted help in preserving a U.S. tax break for American companies in Puerto Rico.

Deaver promised his new clients, the jury was told, that he would contact his friends in the Administration.

At the same time, according to testimony, Deaver also flew to South Korea to sign a $475,000 lobbying contract on trade matters with the government there, the jury was told. He obtained the contract after he had been granted a 30-minute meeting with South Korean President Chun Doo Hwan, during which Deaver delivered a personal greeting from President Reagan, former U.S. Ambassador Richard L. Walker testified.

Deaver’s lobbying for Smith Barney has provided some of the most revealing glimpses into his work. Deaver knew that he and his wife would be flying with Nancy Reagan to Boston and Martha’s Vineyard on a government plane. Prosecutors’ questioning in the trial appeared intended to imply that he thought he could use that fact to impress his clients.

William H. Timbers, a San Francisco vice president for Smith Barney, testified that he received a phone message at his office one afternoon to call Deaver at a special White House number and ask for “Foxtrot.” He did so and was connected with Deaver aboard Nancy Reagan’s plane. A government employee on the same plane said that she believed Deaver had spoken on the phone more than once.

Additional testimony, although inconclusive, suggested that Reagan’s long-time aide may even have reached the President himself on the Puerto Rican tax issue on which he was representing Smith Barney. Notes taken by Puerto Rican tax attorney Richard Copaken, based on a phone conversation with Deaver on May 28, 1985, read in part:

“President is very sympathetic. . . . Spoke with President yesterday.”

Uncertain Over Notes

Under questioning by Seymour, Copaken said he was uncertain whether his notes meant Deaver had spoken with Reagan or whether Deaver was reporting that his friend, Deputy Treasury Secretary Richard G. Darman, had talked with the President. Darman subsequently testified that he had never spoken to the President about the issue.

Apart from Deaver’s claims that he could not recall lobbying certain officials, prosecutors have sought to prove that he perjured himself on another issue--his involvement in the Canadian acid rain problem.

Deaver had sworn to the grand jury investigating him that as a White House aide, he only took part in acid rain discussions a few days before Reagan went to Ottawa on March 17, 1985, for meetings with Canada’s prime minister.

But McFarlane, a former McFarlane aide named Robert Kimmitt and Paul H. Robinson Jr., former U.S. ambassador to Canada, told the jury of first-hand knowledge that Deaver participated in high-level talks on the issue well before the summit.

In addition, former White House Chief of Staff Donald T. Regan, Deaver’s one-time boss, testified that Deaver supported Drew Lewis, a former transportation secretary, as a special envoy to Canada on acid rain as preparations for the Canadian summit progressed.

The issue is a sensitive one for Deaver because the 1978 Ethics in Government Act prohibits former government officials from lobbying on any issue in which they had “personal and substantial” involvement while in government.

But Seymour, the prosecutor who was appointed by a panel of appellate judges last year under provisions of the Ethics in Government Act, failed in a 10-month investigation to find sufficient evidence that Deaver had violated the ethics law.

Seymour was asked specifically to examine allegations that Deaver had violated a one-year federal prohibition that applies to all high-ranking officials who leave the government. The law says that such an official, once he leaves federal service, may not lobby officials at his former agency or department on behalf of a business client for at least 12 months.

Legal Technicality

A legal technicality came to Deaver’s aid. Seymour determined that the Executive Office of the President, where Deaver had worked, was legally separate from other branches of the White House, such as the National Security Council, where Deaver made several of his lobbying approaches. Thus Deaver was not technically prohibited from contacting old colleagues there, Seymour concluded.

To underscore this point, Deaver’s principal defense attorney, Herbert J. Miller Jr., has asked prosecution witnesses like McFarlane and Poindexter if they thought the contact by Deaver was illegal. Both replied, “No.”

Seymour discovered midway through his investigation that he had no case based on the Ethics in Government Act, according to sources familiar with his thinking at the time. But he determined to seek charges anyway, according to these sources, on grounds that Deaver had deliberately lied to his grand jury and a congressional subcommittee about his lobbying work in an effort to minimize the scope of his activities.

Jurors, in fact, have been told that adverse publicity about the investigation last year ultimately killed negotiations between Deaver and the British firm of Saatchi & Saatchi, the world’s largest public relations company, toward the purchase of Michael K. Deaver & Associates for up to $16 million. At the time of these negotiations, Deaver was being questioned by federal investigators about his activities.

The sale to Saatchi & Saatchi would have guaranteed Deaver a comfortable living for the rest of his life. Instead, one by one, his clients dropped off, leaving his firm a nearly empty shell.