Wright Violated Rules, Panel Tentatively Finds : House Ethics Committee Cites Speaker’s Failure to Report Benefits From Texas Partner as Gifts

The House Ethics Committee has concluded tentatively that Speaker Jim Wright (D-Tex.) broke House rules by failing to report as gifts a number of benefits received from a Texas business partner, a source close to the investigation said Monday.

The panel provisionally agreed with its special counsel, Chicago attorney Richard J. Phelan, that the partnership was used to funnel gifts to Wright in the form of an almost rent-free apartment, a Cadillac and an annual $18,000 salary for his wife, the source said.

House rules require members to report gifts of $100 or more on annual financial disclosure forms.

The committee is still considering whether Wright circumvented a limit on outside income for House members by promoting bulk sales of his book of memoirs to political supporters, the source said.

The disclosure came as the 12-member ethics panel prepared to begin today what its members hope will be their final week of deliberations on a preliminary inquiry into the Speaker’s financial affairs and conduct.

Its report, expected at the end of this week or next week, is widely expected to present a “statement of possible violations,” a finding similar to an indictment.

Wright then would get an opportunity to present his defense. After that the committee would issue a ruling or recommend that the full House take action against him. A decision by the House to reprimand or censure Wright could force him to resign as Speaker.

Wright has acknowledged that he may have used bad judgment or committed technical violations of House rules without meaning to do so. He has contended that his wife, Betty, earned her pay by doing research for a real estate firm and that the use of the car and apartment were furnished as fringe benefits. The Wrights later bought the car and the apartment.

Meanwhile, a defender of the Speaker confirmed that the Ethics Committee was focusing on Wright’s complex financial ties with the Texas businessman, Ft. Worth developer George A. Mallick Jr., and the controversial book publishing arrangement that brought Wright $55,000 in royalty payments.

Rep. Martin Frost (D-Tex.) said that Wright’s attorney, William C. Oldaker, had prepared a document listing the alleged violations of House rules cited by Phelan, along with a defense of the Speaker’s position on each violation.

More than 50 members of the House already have been briefed on the issues being considered by the panel, Frost said.

In a related development, CBS News reported late Monday that the committee already has voted to accuse Wright of more than 30 ethics violations. A spokesman for Wright, Mark Johnson, labeled the broadcast as “absurd” and said the Speaker had no information of that nature.

Rep. John T. Myers (R-Ind.), a member of the ethics panel, declined to comment on whether the committee has started voting on the charges against Wright. “There’s a lot of speculation,” Myers said. “There’s some truth to some of it and some of it is just wrong.”

He said that there is a good chance that the committee will issue its findings this week but that the action could be delayed until next week.

“We’re a long way from announcing our results,” said another member of the committee, who asked not to be identified. He said final votes had not been taken on the allegations against Wright.

Wright initially brushed aside the charges against him as the work of Republican extremists, but the Speaker and his friends now are taking them much more seriously. Senior House Democrats, in fact, have said privately that they are seriously troubled by press reports of the case against their leader.

Wright’s business ties with Mallick grew from a friendship that started more than a quarter-century ago in Ft. Worth.

Business Partnership

The Speaker’s wife was paid $18,000 a year by a Mallick-owned company in 1978 and 1979. From 1980 to 1984, she received the same salary from Mallightco, an investment partnership created by the Wrights and Mallick and his wife, Marlene. Each couple made contributions valued at $58,000 to finance a half share of the venture.

In addition to the salary received by Betty Wright, the Wrights were allowed to use a Ft. Worth condominium owned by the Mallick family, at first without paying rent and later for a $22 daily rate.

The committee’s special counsel contends that Mallightco was created essentially as a conduit to allow Mallick to funnel income and benefits to the Speaker and his wife, sources close to the committee said.

Although Betty Wright has remained silent on the matter, Wright has said that she earned her salary by doing research on possible investments for the company. Phelan reportedly has argued that she did little to justify her pay.

Although the Speaker reported the salary received by his wife as income on his annual financial disclosure reports, he did not characterize it as a gift. He did not list the use of the apartment or the 1979 Cadillac provided to his wife during the six-year period.