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Funding of Gingrich PAC Raises Questions : Politics: Key corporate donors have interests in pending federal action. FEC alleges campaign violations.

TIMES STAFF WRITERS

A political committee spearheaded by House Speaker Newt Gingrich (R-Ga.) collected more than $7 million over a five-year period, much of it by soliciting large donations from corporate executives with major interests pending before the federal government, records show.

The GOP Action Committee (GOPAC) played a significant role in the election of a Republican majority to Congress last fall by recruiting and supporting local candidates.

But the organization has become a focus of controversy because it has long refused to disclose the identities of most of its large donors. Moreover, taking advantage of a loophole in federal campaign laws, GOPAC has collected contributions from wealthy individuals that far exceed annual federal election limits.

One Wisconsin couple alone gave $715,457 to Gingrich’s organization between 1985 and 1993--nearly twice what they could have donated directly to all federal candidates. Indeed, the GOPAC contributions compare more closely in size with those collected by the Republican and Democratic parties to fund their national activities.

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While many of the GOPAC donors are longtime conservative or Republican activists, their largess raises the potential for numerous conflicts of interest, particularly in light of the power that Gingrich now wields as House Speaker.

Gingrich, for instance, has broken with his party’s position to closely ally himself with a major GOPAC contributor, textile magnate Roger Milliken, on the issue of import quotas. Also, Gingrich has vowed to overhaul the Food and Drug Administration to make it more responsive to manufacturers of medical devices. Executives or lobbyists for seven companies regulated by that agency are among GOPAC’s heavy-hitters.

GOPAC’s “charter members,” those giving at least $10,000 annually, also include the heads of two firms under federal investigation--Flowers Industries Inc. and Thiele Kaolin Co., both of Georgia.

The subsidiary of another company with ties to GOPAC, Southwire Inc. in Carrollton, Ga., recently paid a $1-million fine for exporting contaminated fertilizer.

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The names of 172 major donors, representing interests ranging from Wall Street investment firms to Orange County land developers, are contained in an internal GOPAC document obtained by The Times and other news organizations. A total of 18 donors gave more than $100,000 each between 1985 and mid-1993--the period covered by the records.

GOPAC “has clearly violated the spirit of laws which govern how much people can give to support politicians,” said Ellen Miller, executive director of the nonpartisan Center for Responsive Politics, which tracks federal campaign contributions. “The biggest concern is the fact that it is all hidden.”

Gingrich has maintained that GOPAC follows campaign-finance laws scrupulously. He also expressed confidence that he will be cleared of allegations that he is circumventing House rules on tax requirements on income and conflicts of interest. A complaint lodged by Ben Jones, Gingrich’s Democratic opponent in November, is pending before the House Ethics Committee.

Lisa B. Nelson, GOPAC’s executive director, said about 90% of the group’s activities go to support candidates in state and local elections. Thus, only 10% of the committee’s fund raising falls under the purview of the Federal Election Commission and its limits and disclosure requirements.

Critics contend that GOPAC is heavily geared toward influencing federal elections.

“There is no loophole,” Nelson said. “We are following every law we have to in filing with the FEC and state levels.”

Gingrich also strongly rejects the notion that he might be beholden to any major GOPAC donors.

“I raised so much money over the years, from so many different people that . . . I don’t owe anyone,” he told National Public Radio two weeks before the Nov. 8 elections.

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GOPAC was founded in 1978 by then-Delaware Gov. Pierre S. (Pete) du Pont IV and 12 other Republican governors to help support state and local candidates. When Gingrich took over in 1986, GOPAC began pursuing a specific goal of electing enough Republican candidates to wrest control of the House from the Democrats.

By any accounting, it has been very effective. GOPAC boasts that half of the 136 Republican lawmakers elected since 1990 actively used the group’s training materials and followed its advice on how to attack Democratic opponents and use powerful issues. Gingrich, who serves as GOPAC’s general chairman, campaigned in more than 120 congressional districts last year. The committee has a $2-million annual budget.

“Of course, we wouldn’t have (captured the House) without GOPAC,” said Howard H. (Bo) Callaway, a former Georgia congressman who served as GOPAC chairman between 1987 and 1993.

So extensive are GOP lawmakers’ ties to GOPAC that Democrats now complain that two of the five Republican members of the House ethics panel should disqualify themselves from weighing Jones’ allegations against Gingrich.

Until confidential donor lists began circulating recently, the identities of most GOPAC members and the amounts they contributed were not known. Early on, donors were promised confidentiality, and GOPAC felt obligated to keep that commitment, officials said.

“We’ve got some of the shyest people you’ve ever known who contribute to GOPAC,” Callaway said. Their reaction to full disclosure, Callaway said, was: “ ‘Oh my goodness, what if GOPAC did something wrong and I was associated with it?’ They just don’t want to be.”

Many big donations remain unknown. GOPAC refused to file donation reports until 1991, saying it works with local--rather than national--candidates. Then, under pressure from Democrats, it agreed to declare 10% of the donations, saying that was the share then being used in federal races.

With the complaints and allegations mounting, GOPAC in November began making new donor information available for inspection at its Washington office, although still declining to file it with the FEC.

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“Because Newt was going to be Speaker of the House, we wanted to make sure that we’re as open as we can be,” Nelson said.

Callaway said that requirements notwithstanding, GOPAC should have opened its books sooner.

“I am delighted that GOPAC is moving forward with letting the names out,” he said. “If somebody thinks I’m buying influence, they should know I am doing this.”

But the FEC is far from satisfied. In a pending lawsuit, the agency contends that GOPAC violated federal campaign regulations by not registering earlier as a political committee.

GOPAC is part of a network of interlocking groups affiliated with Gingrich--referred to by some as Newt Inc.--that have helped fuel his campaigns and those of other Republican candidates. These donors have helped to underwrite courses that Gingrich has taught at Georgia colleges, his weekly television call-in show and two book projects prior to his most recent, and controversial, agreement with HarperCollins Publishers Inc. Many of the GOPAC charter members donated to one or more of these other enterprises as well.

But the size of the contributions solely to GOPAC from corporate donors with important interests before the federal government raises questions about the prospect of preferential treatment.

For example, Golden Rule Insurance Co., an Indianapolis-based medical insurer, has lobbied Congress to insert a provision in health care reform legislation that would allow consumers to set aside pretax dollars to pay for health care costs. Golden Rule has pioneered such medical savings accounts.

Gingrich has promoted the medical payment plan as “a very powerful, revolutionary” proposal on his weekly television program and has co-sponsored legislation containing such a provision.

Among GOPAC’s charter members are Golden Rule Chairman J. Patrick Rooney and President John M. Whelan, who gave a total of $117,076 to GOPAC between 1991 and 1993, records indicate. The support for Gingrich did not end there.

Golden Rule sponsors Gingrich’s weekly program on National Empowerment Television, a conservative cable TV network. The firm also gives money to the Progress and Freedom Foundation, the nonprofit group that finances a course called “Renewing American Civilization” that Gingrich teaches at Reinhardt College near Atlanta. In addition, Gingrich’s campaign has received $15,000 from Golden Rule’s political action committee, $7,415 from various Rooney family members and $2,500 from Whelan since 1992, records show.

The fourth largest donor to GOPAC is Roger Milliken of Milliken & Co., a textile manufacturer. He contributed at least $255,000, and his brother, Gerrish H. Milliken, gave $90,000.

The Millikens have been outspoken opponents of the General Agreement on Tariffs and Trade, which would lessen trade barriers for many imports and exports. Gingrich has acknowledged that he decided to raise questions about whether GATT infringed on American sovereignty after meeting with Roger Milliken last year. Gingrich ultimately backed GATT.

In 1990, Gingrich broke with then-President George Bush and the GOP leadership in the House to work with Milliken on a massive grass-roots lobbying campaign backing stiff new quotas on imported textiles, apparel and shoes. At the time, Gingrich’s district had two textile plants.

The bill was passed by Congress, but vetoed by Bush.

“We’ve known Newt for a long time and like him,” said Josh Nash, Milliken’s Washington lobbyist. “Being a Southern congressman, he has been enormously helpful to the textile and fiber industry over the years.”

Gingrich does not always promote Milliken’s interests. Nash noted that Gingrich also supported the North American Free Trade Agreement, which Milliken opposed, and added that Milliken is friendly to many Republican efforts.

“Mr. Milliken has given to Republican organizations all his life, and he started giving to GOPAC when Du Pont was running it,” he said.

A number of executives who have contributed heavily to GOPAC represent industries that have extensive dealings with the FDA, a prime target of Gingrich and other Republicans seeking to roll back government regulations. These include the family of Schwan Food Products Inc., which gave $279,905 to GOPAC; RJR Nabisco Inc. lobbyist M.B. Oglesby Jr., and William K. Hoskins, vice president for Marion Merrell Dow Inc., a pharmaceuticals firm.

Gingrich has described FDA Commissioner David A. Kessler as “a thug and a bully” and has called the FDA a “job killer.” In a post-election speech before a biotechnology industry conference, Gingrich disclosed that he had been working with his Progress and Freedom Foundation to design a replacement for the agency that would be staffed by biomedical “entrepreneurs” who would test and certify products themselves.

Hoskins said he contributes to GOPAC to support the grooming of quality Republican candidates, not to influence government decisions.

“People who are involved in (GOPAC) are very much into the ideals that I’m interested in,” he said. “There is no connection in my mind between my involvement in GOPAC and the FDA.”

Several other GOPAC supporters who have had run-ins with the federal government have made large contributions.

Flowers Industries is one of five large Southern baking companies being investigated by the Justice Department. Two federal grand juries are looking into allegations of bid-rigging and other anti-competitive activity in the sale of bread and other baked goods. Flowers Chairman Amos R. McMullian gave $62,592 to GOPAC, and founder William Flowers kicked in $21,000. A spokesman for Flowers was not available for comment.

The Justice Department has launched a criminal antitrust investigation of several of Georgia’s largest kaolin mining companies, including Thiele Kaolin Co. Chairman Paul F. Thiele, who heads the firm, has given GOPAC $31,100 since 1991.

Southwire Inc., a major employer in Gingrich’s old district, was indicted in 1992 for violating federal hazardous-waste recycling laws when its South Carolina subsidiary sent 3,000 tons of toxic-laced fertilizer to Bangladesh. The company president, Jim Richards, has given $80,200 to GOPAC. Southwire declined to comment.

Times staff writers Michael Ross, Dwight Morris and Robert L. Jackson and researchers D’Jamila Salem and Caleb Gessesse in Washington and Edith Stanley in Atlanta contributed to this story.

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Top 10 Contributors

GOPAC, a political committee spearheaded by House Speaker Newt Gingrich (R-Ga.), has collected contributions that vastly exceed annual federal election limits. Here are the top contributors from 1985-93:

Donor Residence Amount Occupation Terry and Mary Sheboygan, Wis. $715,457 CEO/president Kohler Windway Capitol Group (kitchenware, sailboats); 1982 Wisconsin guber- natorial candidate Owen Roberts Belleair Bluffs, $324,513 President of Capital Fla. Formation Counselors Inc. (investments) Richard Gilder Jr. New York $310,000 President of Gilder, Gagnon, Howe & Co. (investments) Roger Milliken Spartanburg, S.C. $255,000 CEO/chairman of Milliken & Co. (textiles) Delores Schwan Marshall, Minn. $279,905 Schwan Food products Philip M. Gelatt Sparta, Wis. $230,300 President of Northern Engraving (graphics machinery) Jesse J. Charlotte, N.C. $220,000 Thompson Clermont Development Co. (real estate) Fred Sacher Grass Valley, $196,000 Orange County developer K. Tucker New York $182,000 Managing partner of Anderson Cumberland Associates (financial group) Robert H. Krieble Washington $172,624 Owner Krieble Associates Inc.

Source: GOPAC donor list


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