COLUMN ONE : Donations Flood a Loophole : ‘Soft money’ giving to political parties is on the rise, skirting Watergate-era rules designed to end influence buying. Big donors have a lot at stake in Congress.

During the highly contentious debate over the Clean Air Act of 1990, the Bush Administration and Congress unexpectedly agreed to water down one of the bill’s anti-pollution provisions by allowing the use of “reformulated gasoline” in place of cleaner-burning alternative fuels.

A key proponent--and beneficiary--of the change was Atlantic Richfield Co., the Los Angeles-based oil giant that developed reformulated gas. Despite opposition by environmentalists, who argued that Arco’s methanol-gasoline blend would produce three times as much pollution as other alternative fuels, the company and its allies prevailed in the political arena.

Arco wins a lot in Washington. And there are clues as to why.

Arco ranks at the top of the list of “soft money” contributors who give large sums to the Republican and Democratic national committees and related party coffers--gifts that are exempt from the tight restrictions imposed on other types of campaign contributions. Over the past two years, Arco has made more than $1 million in soft money donations.

“What the contributions do is tell officeholders that Arco is very interested in the political process,” said Senior Vice President Kenneth Dickerson. It is, he added, “a way of making Arco visible, so when they’re writing a new rule they’ll pick up the phone and say, ‘What’s your view?’ ”

Soft money contributions--so called because few hard-and-fast rules govern them and they do not go directly to specific politicians--are on the rise, a computer-assisted Times study shows. Corporate interests and wealthy individuals are taking advantage of what advocates of campaign finance reform see as glaring loopholes in Watergate-era laws that sought to limit special interest contributions.

And while it is hard to establish a direct link between soft money contributions and government actions, many of the biggest donors represent interests involved in far-reaching legislative and regulatory debates: oil, tobacco, agriculture, labor and entertainment, among others. Besides Arco, the list of heavy-hitters includes the agricultural giant Archer Daniels Midland Co., RJR Nabisco, United States Tobacco and the United Steelworkers union.

“Reform legislation reacted to the particular abuses of Watergate. It doesn’t take ingenious people long to figure out more abuses that weren’t specifically covered by the legislation,” said Samuel Dash, chief counsel to the Senate Watergate committee and a professor at Georgetown Law School. Big money makes the federal government “accountable, not to the people, but to the particular interests that have bought the right to that accountability.”

Republican and Democratic campaign committees, the Times study shows, have collected $64.2 million in soft money contributions so far in the 1991-92 election cycle, the first in which the parties must disclose their soft money donors. California accounts for $11.7 million, or 18%.

The Republicans took in $43.1 million. About 275 individuals have joined the GOP’s elite “Team 100” by making soft money contributions of $100,000 or more, personally or through their corporations.

The Democrats have raised $21.1 million in soft money. About 270 have made the list of Democratic Party “trustees” by giving or raising a total of at least $100,000, while 60 have become “managing trustees” by topping $200,000.

Spurred by the arm-twisting, secret slush funds and other campaign abuses of Richard M. Nixon’s Administration, Congress limited contributions by individuals in congressional races to $1,000 per election. The limit for political action committees was set at $5,000.

Congress also instituted a system of limited public financing for presidential elections, with each major candidate receiving $55 million in taxpayer funds for the fall race.

Corporate contributions to individual candidates have been prohibited in federal campaigns since 1907. Labor union contributions to candidates have been banned since the 1940s.

The soft money loophole has evolved over the past 10 years through a series of rulings by the Federal Election Commission that allowed the national parties to tap corporate coffers.

“We think the whole thing is a sham, and the only reason it is going on is because the Federal Election Commission failed to properly interpret the law,” said Common Cause President Fred Wertheimer, whose organization went to court to force public disclosure of soft money donations. “What it has done is reinvented the old Watergate system.”

A campaign finance reform bill passed by the Democratic-led Congress this year would have curbed soft money donations, but it was vetoed by President Bush, who objected to other provisions in the measure.

Officials for both parties, as well as many large donors, insist no favors are offered in exchange for contributions. That would be illegal. But a number of party officials and contributors acknowledge that the money can provide entree--a precious commodity in Washington’s corridors of power.

“They may get their voice heard . . . get their phone call returned,” said Gary Koops, spokesman for the Republican National Committee.

Arco’s Coup

So far, Arco has given $585,373 to Democratic coffers and $455,300 to the Republicans during the current election cycle. Chief Executive Officer Lodwrick M. Cook personally shelled out $80,000 for the President’s Dinner last April and hosted a gala luncheon fund-raiser for Bush at the Republican National Convention in Houston that raised $3 million.

When the Clean Air Act was under consideration two years ago, Arco was among the leading proponents of a revision that scaled back a Bush Administration proposal calling for use of 100% alternative fuels, such as methanol, in the nation’s smoggiest cities. Arco, which produces a reduced-emission leaded gasoline, lobbied for a revision allowing a mixture of 85% methanol and 15% gasoline.

Oil and auto companies argued that the change would remove a bias in favor of pure methanol. Environmentalists countered that it would undercut the alternative-fuels program.

The issue produced an unusual public split in the Bush Administration: Environmental Protection Agency Administrator William K. Reilly stood by the Administration’s original position, but then-White House Chief of Staff John H. Sununu gave the GOP members of a key subcommittee a green light to help pass the amendment.

Bush, meanwhile, pleased Arco by pushing to permit oil exploration in Alaska’s Arctic National Wildlife Refuge, which experts believe may hold the country’s largest remaining oil and natural gas field. The Senate killed Bush’s proposal last year.

Arco executive Dickerson said that CEO Cook can get Bush on the phone whenever he wants. But he insisted that Cook “will not lobby him because that’s almost a certain way to destroy a friendship.” Dickerson said Bush has called Cook “on a number of occasions” to ask his views on the economy, events in California and other matters.

Dickerson insisted that the company’s soft money contributions did not influence the Clean Air Act deliberations. Congress, rather than the Administration, was responsible for the reformulated gas revision, he said.

But Arco also is one of the big givers that donates to both parties--a practice that critics say is a way to curry favor with both the executive and legislative branches.

ADM and Ethanol

Few companies receive as many direct benefits from the federal government as Archer Daniels Midland. The country’s largest agricultural processor and the self-styled “supermarket to the world” ranks right behind Arco on the soft money list. The Illinois-based company has given $702,000 to the Republicans and $136,500 to the Democrats. Chairman Dwayne O. Andreas, who has likened campaign giving to tithing, has sent another $300,000 to the GOP.

ADM is a major beneficiary of sugar and corn price supports. It has a direct stake in farm export programs. But its most high-profile efforts to shape public policy have concerned ethanol: ADM accounts for about 70% of the nearly 1 million gallons of corn-distilled fuel produced in this country each year.

ADM has earned substantial profits on ethanol because of federal tax subsidies and import tariffs championed by Senate Minority Leader Bob Dole (R-Kan.) and other farm-state lawmakers who have received hundreds of thousands of dollars in campaign funds from ADM. The federal tax credit, which was to expire this year, was recently extended to the year 2000 by the Bush Administration--at a cost of several billion dollars to taxpayers.

Earlier this month, in an election-year move, Bush granted a special Clean Air Act waiver to expand the use of ethanol-blended fuels in smoggy cities. ADM and corn growers had intensively lobbied the Administration for this lucrative exemption.

Environmentalists contended that a waiver would undermine the painstakingly negotiated clean air bill and increase ozone-forming emissions. In a bid to limit negative reaction to the waiver, the Administration required oil companies to offset the increased ethanol pollution by further reducing gasoline emissions.

Rep. Henry A. Waxman (D-Los Angeles), chairman of the House Energy and Commerce subcommittee on health and the environment, said that despite the trade-off with cleaner gasoline, he views the waiver as “political giveaway, and nothing more. It shows that ADM has extraordinary clout.”

ADM executives declined to comment on the company’s contributions or lobbying effort.

The Tobacco Lobby

No other industry can match the combined financial clout of tobacco and food companies. Food and tobacco giant RJR Nabisco has given $477,955 to the Republicans and $301,000 to the Democrats. United States Tobacco gave $515,504 and $95,346 respectively, while Philip Morris donated $387,080 and $202,500. The Tobacco Institute, the industry trade association, gave $75,477 to the Republicans and $128,275 to the Democrats.

In addition, Henry R. Kravis and other principals in the investment firm Kohlberg, Kravis & Roberts, which has a controlling interest in RJR Nabisco, gave $125,000 to the Republicans and $165,650 to the Democrats. Kravis co-chaired the Bush campaign’s finance committee earlier this year.

“We’ll continue to express views that are in the best interests of our shareholders, employees and customers,” Philip Morris spokeswoman Posie DiSesa said of the company’s bipartisan giving. “We believe that democracy is not a spectator sport.”

Health and Human Services Secretary Louis W. Sullivan and Surgeon General Antonia Coello Novello have criticized cigarette companies for marketing that targets teen-agers, minorities and women, but have stopped short of calling for legislative action.

The Bush Administration, along with congressional allies of the tobacco industry, has opposed legislation to expand federal anti-tobacco educational efforts and discourage youths from buying cigarettes. The Administration has also pushed to increase tobacco exports to Third World countries--which it maintains is a trade, not a health, issue.

Previous administrations have also stopped far short of waging war against smoking.

“The tobacco industry is clearly getting its money’s worth,” said Cliff Douglas, tobacco policy director for the Advocacy Institute, a Washington public interest group that co-authored an August study that asserted the industry’s soft money contributions drive White House policy.

Labor and Democrats

Organized labor remains a bastion of financial support for the Democrats. The United Steelworkers has donated $389,000 to the Democratic National Committee and Senate and House campaign committees. The National Education Assn. has given $284,202, and the American Federation of State County and Municipal Employees has contributed $211,574.

In addition, the Service Employees International union has given $167,675; the Sheet Metal Workers International, $200,700, and the National United Auto Workers, $165,000.

“First and foremost is access,” said Mickey Ibarra, political advocacy manager for NEA governmental relations. “We believe that we can be a very, very key asset in a new Administration. Access and having the opportunity to be consulted are very, very important.”

Democratic nominee Bill Clinton was not labor’s candidate initially, but major unions have since united behind him.

“Big labor has certainly had an impact on Bill Clinton, the candidate,” said Republican National Committee spokesman Gary Koops. “And I think big labor plans to have the same kind of impact if there were to be a Bill Clinton presidency.”

Clinton’s press secretary, Dee Dee Myers, said that the labor contributions had not influenced the Democratic nominee’s policies and would not do so if he is elected.

After hedging for months, Clinton recently risked the ire of labor groups by announcing his conditional support for the most high-profile labor issue in the campaign: the North American Free Trade Agreement with Mexico and Canada. Clinton, who had supported putting the pact on the diplomatic fast track, said he would back the treaty as long as Congress takes steps to retrain Americans who might lose their jobs and to protect the environment. Organized labor is adamantly opposed to the accord.

Ambassadors Club

Access to an Administration can take many forms.

Bush has chosen eight Team 100 contributors as ambassadors to other countries. The tally matches the record set by Nixon, whose chief fund-raiser, Herbert W. Kalmbach, went to prison for promising an ambassadorship for a $100,000 contribution and raising funds from envoys around the world.

One such donor is Roy Huffington, a Texas oil and real estate tycoon who has been a Team 100 member since 1989 and recently contributed another $102,400. Huffington became ambassador to Austria in 1990. His son Michael, who lives in Santa Barbara, mounted a record-setting $3.5-million primary campaign in June that defeated veteran Rep. Robert J. Lagomarsino (R-Ventura).

Bush withdrew the nomination of another Team 100 member, Donald H. Alexander, to be ambassador to the Netherlands in July. The appointment had been blocked by Sen. Paul S. Sarbanes (D-Md.), who complained about Alexander’s $100,000 gift to the GOP as he sought the job.

Alexander, who had not previously been a major donor, denied that the contribution was related to his lifelong goal to return to his native Amsterdam as U.S. envoy.

Among individual givers nationwide, Edgar M. Bronfman, chairman of Joseph E. Seagram & Sons, ranks first. He gave $450,000 to the Republicans. The alcohol industry opposes excise tax increases and additional health warning labels on alcohol and supports continued export promotion subsidies.

Right behind Bronfman is a man who may qualify as the most mysterious donor of them all: Michael Kojima. An unknown in political circles, the Japanese-American businessman from Los Angeles sat at the head table with President and Barbara Bush in April after contributing $400,000 to the President’s Dinner, which raised a record-setting $9 million. His company, International Marketing Bureau, gave another $358,770 to the Republicans.

Shortly after the dinner, Kojima seemingly vanished amid claims that he owed money to the state of California, a Los Angeles shopping center chain, past wives, North Carolina fishermen and Indonesian bankers, among others. Kojima was arrested Saturday in Salt Lake City on a Los Angeles County charge of failure to pay child support. Neither Kojima nor his attorney returned recent telephone calls.

The top Democratic donor is philanthropist Alida Rockefeller Messinger, sister of Sen. John D. (Jay) Rockefeller IV (D-W.Va.), the DNC national finance chairman. She gave $300,000.

Upholding another longtime tradition, many prominent figures in the entertainment community also helped fill the Democratic coffers. The marquee names feature MCA Chairman Lew R. Wasserman, who gave $187,730; the Walt Disney Co. and various executives, with a total of $155,000; record producer David Geffen, $120,000, and the Jon Peters Organization, $80,000.

Most recently, several entertainment industry executives and film studios weighed in against the cable regulation bill passed by Congress. They opposed it because it will allow broadcasters to charge cable companies for the rights to carry local and network programming without having to give any of the additional revenue to studios and other firms that produced the shows. Congress overrode Bush’s veto of the measure.

Staff researcher Murielle Gamache and librarians Caleb Gessesse and Aleta Embrey contributed to this story.

The Biggest Spenders

Here are the leading corporate and individual sources of “soft money,” contributions to Republican and Democratic national committees and related party coffers. Soft money gifts are exempt from the limits imposed on other campaign contributions:

TOP CORPORATE CONTRIBUTORS

COMPANY AMOUNT DONATED TO CITY Republicans Democrats Total Atlantic Richfield $455,300 $585,373 $1,040,673 Los Angeles Archer Daniels Midland 702,000 136,500 838,500 Decatur, Ill. RJR Nabisco 477,955 301,000 778,955 New York United States Tobacco 515,504 95,346 610,850 Greenwich, Conn. American Financial Corp. 590,000 0 590,000 Cincinnati, Ohio Philip Morris 387,080 202,500 589,580 New York Merrill Lynch 377,100 47,300 424,400 New York United Steel Workers 0 389,000 389,000 Pittsburgh, Pa. Int’l Marketing Bureau 358,700 0 358,700 Los Angeles Chevron 215,000 77,600 292,600 San Francisco National Education Assn. 0 289,202 289,202 Washington Limited Service Corp. 242,400 36,500 278,900 Columbus, Ohio Occidental Petroleum 202,400 58,950 261,350 Los Angeles Brown Forman Corp. 239,900 0 239,900 Louisville, Ky. United States Surgical 207,400 22,800 230,200 Norwalk, Conn.

TOP INDIVIDUAL CONTRIBUTORS

Company/Occupation Name Recipient City Edgar M. Bronfman GOP Joseph E. Seagram & Sons New York Michael Kojima GOP International Marketing Bureau Los Angeles Dwayne O. Andreas GOP/Dem* Archer Daniels Midland Decatur, Ill. A. Rockefeller Democrats Philanthropist Messinger Minneapolis Carl Lindner GOP American Financial Corp. Cincinnati Swanee Hunt Democrats Philanthropist; Author/Conductor Denver Peter B. Lewis Democrats The Progressive Corp. Automobile insurance Cleveland, Ohio Peter & Eileen Norton Democrats Philanthropists Santa Monica Merle C. Chambers Democrats Axem Resources Littleton, Colo. Sam J. Bamieh GOP American Intertrade Group San Mateo Richard J. Dennis Democrats Richard Dennis & Co. Commodities broker Chicago Walter H. Annenberg GOP M.L. Annenberg Foundation St. Davids, Pa. John Moores Democrats Computer software Sugar Land, Tex. Lew R. Wasserman Democrats MCA Los Angeles Thomas J. Watson Dem/GOP** IBM, former chairman Armonk, N.Y.

Name Amount Edgar M. Bronfman $450,000 Michael Kojima 400,000 Dwayne O. Andreas 301,000 A. Rockefeller 300,650 Messinger Carl Lindner 250,000 Swanee Hunt 250,000 Peter B. Lewis 231,300 Peter & Eileen Norton 210,000 Merle C. Chambers 208,000 Sam J. Bamieh 207,800 Richard J. Dennis 201,300 Walter H. Annenberg 200,000 John Moores 200,000 Lew R. Wasserman 187,730 Thomas J. Watson 184,000

* Includes $300,000 to Republican committees and $1,000 to the DNC.

** Includes $100,000 to Democratic committees and $84,000 to Republican committees.

Sources: Reports filed by the Democratic National Committee, Democratic Congressional Campaign Committee, Democratic Senatorial Campaign Committee, Republican National Committee, National Republican Congressional Committee and National Republican Senatorial Committee for contributions made through Aug. 31.