In one of the costliest and most aggressive lobbying campaigns ever mounted by a foreign company, Toshiba Corp. paid $4.3 million to one law firm as part of its successful drive to blunt stiff import sanctions for its illegal sale of high-technology products to the Soviets, Justice Department records show.
That payment for one year’s work by the firm, Mudge Rose Gutherie Alexander & Ferdon, was only part of the money spent by Toshiba and its wholly owned American subsidiary to stop Congress from banning its $10 billion a year in sales in the United States.
Sen. John Heinz (R-Pa.), who introduced legislation this month to tighten reporting loopholes in the Foreign Agent Registration Act, estimated that the true cost of the Toshiba effort will exceed $9 million.
In addition to Mudge Rose, three other Washington law firms received a total of $261,000 as part of the Toshiba lobbying effort, according to records at the Justice Department’s Foreign Agent Registration Office. Fees paid since last spring have not yet been recorded by the Justice Department.
In addition, at least one other Washington law firm and a public-relations firm are known to have devoted extensive effort to Toshiba’s case. But because they represented Toshiba America Inc., the wholly owned American subsidiary of the Japanese giant, the two firms did not register with the Justice Department. Under the law, Toshiba America is regarded as a U.S. corporation and its lobbyists are not required to register as foreign agents.
“In all the 21 years I have been in public office I’ve never seen a lobbying campaign so orchestrated at so many levels,” said Sen. Jake Garn (R-Utah), the principal mover behind the Toshiba sanctions.
Garn said he was lobbied for months by Japanese government officials, Japanese members of parliament, Toshiba officials, officers of Toshiba America, officials of the Reagan Administration and finally by American distributors of Toshiba products “really pushing (the argument that) 100,000 jobs would be lost” in the United States if the legislation passed.
The Library of Congress’ Ronald Morse, a specialist in Japanese lobbying in Washington, said the Toshiba effort was a watershed for Japan. “It is the first manifestation of an indigenous grass-roots American constituency for the Japanese,” Morse said. “It marks a new dimension and is a warning that the Japanese are more sophisticated than they had been, and their role is much more significant.”
Instead of banning all sales, Congress softened the sanctions to a three-year restriction on U.S. government purchases of Toshiba products, which amount to about $100 million a year. But the legislation contains a number of exemptions for national security and other reasons that will likely allow the Japanese electronics conglomerate to keep most of its government business.
The only complete ban affects Toshiba Machine Co., the subsidiary that actually sold the high-technology products to the Soviets.
“The message of the Toshiba-sanctions fight is that up to a point crime does pay,” said Heinz. “It pays U.S. lobbyists and it pays the violators who made about $40 million.”
Toshiba was aided by vigorous efforts by the Reagan Administration against the sanctions, which top officials in the White House and State, Defense and Commerce departments said would be counterproductive to the U.S. objective of getting Japan to upgrade its lax enforcement of rules against sales of strategic goods to the Soviet bloc.
Further, U.S. electronics companies, including such major producers as International Business Machines and American Telephone & Telegraph Co., lobbied against the sanctions out of a concern that their production would suffer because they would not be able to get components made by Toshiba.
Toshiba’s effort was directed by David P. Houlihan, a trade specialist in the Washington office of Mudge Rose, whose firm received the majority of the lobbyist fees.
Houlihan said the bulk of the fees was spent on a private investigation that found Toshiba Corp. was not involved in the sale to the Soviets by its subsidiary, Toshiba Machine Corp., and in designing a stiff export-control plan for the company that was used to win Reagan Administration opposition to stringent sanctions.
Houlihan brought in Leonard Garment, formerly White House counsel in the Nixon Administration, and former Democratic Rep. James R. Jones of Oklahoma to work on behalf of Toshiba. Garment dealt with the defense establishment while Jones worked Capitol Hill. Their Washington law firm, Dickstein, Shapiro & Morin, was paid $111,000.