Dole Lent Clout to Gallo Winery

When the E&J; Gallo Winery needed some political muscle to ease federal regulations on champagne, the giant California winemaker called on a senator from Kansas for help.

Bob Dole, then the Senate Republican leader, responded by pressuring the Bush administration in 1992 to abandon a proposed crackdown on labeling standards and permit Gallo to sell its inexpensive sparkling wines as “Charmat method” champagne, according to interviews and newly obtained documents.

Gallo eventually prevailed, as it often has in Washington over the last decade on issues ranging from tax legislation to trade--usually with Dole’s assistance.

So why has Dole, who vigorously represented the interests of Midwestern corn and wheat farmers during his 35 years in Congress, come to the aid of a Modesto grape grower?

A spokeswoman for Dole said the former Senate majority leader, who retired in June to run full-time for president, was standing up for what he believes in and acting in the government’s best interests.

Another explanation could come from federal election records: Since 1986, Ernest Gallo and his family have pumped more money in individual contributions into Dole’s political campaigns--$274,000--than anyone from Kansas or anywhere else. The Gallos also have donated at least $705,000 to Dole’s charitable organization.

“This is as garish an example of a politician helping a special interest that I have seen in my 20 years in Washington,” said Charles Lewis, author of “The Buying of the President” and director of the nonpartisan Center for Public Integrity. “If this isn’t a quid pro quo, what is?”

Without a doubt, Dole is in broad company. Many Democrats and Republicans on Capitol Hill provide special favors for their largest financial supporters.

“My view of this from the inside is that we are all guilty and we all try to be guiltier,” said Lawrence O’Donnell, a former Senate Finance Committee chief of staff who inserted dozens of tax breaks for corporate America into the 1993 tax bill at the request of the Clinton administration and congressional Democrats.

But while nearly all elected officials collect money, and many do favors for donors, Dole was extraordinarily well positioned in Congress to deliver for big business. He served as Senate majority leader for four years, as minority leader for eight and as a member and chairman of the powerful Senate Finance Committee.

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Since 1980, Dole has solicited $103.4 million to bankroll his various political pursuits, as well as a charitable foundation and his own conservative think tank. In addition, special interests have contributed corporate jets to fly Dole around 538 times over the last six years.

When asked during the first presidential debate how he avoids being influenced by campaign donors, Dole said: “I think it’s very difficult. Let’s be honest about it. That’s why we need campaign finance reform.”

Dole declined to be interviewed for this story. His campaign spokeswoman, Christina Martin, said Dole has “never been shy about taking on powerful corporate interests . . . . His resistance to special interest influence can be seen in his solid record, which is consistent on countless issues. To suggest otherwise is absolutely inane.”

The following is a look at slices of Dole’s relationships with three corporate donors.

E&J; Gallo Winery

In 1990, the Bureau of Alcohol, Tobacco and Firearms found that Gallo and other winemakers were ignoring federal labeling regulations by creating the impression that the inexpensive sparkling wines they sold were the same as French-made Champagne. Agency records show that the ATF planned to take aggressive actions to enforce the standards.

But the provisions were important to Gallo’s hopes of dominating the $2.9-billion U.S. sparkling wine market. Gallo wanted the government to stop requiring the term “bulk processed” on its sparkling wine labels. On the other side were U.S. and French champagne makers who use the traditional and more time-consuming champenoise method of fermenting wine in individual bottles.

Gallo preferred “Charmat method,” named for inventor Eugene Charmat, to describe its process of fermenting sparkling wine in pressurized steel vats. Such a change, traditional champagne producers argued, would deceive consumers into thinking that Gallo’s less expensive sparkling wines were as good as champenoise champagne.

The dispute stretched over three years as the parties hired high-priced Washington lawyers and enlisted members of Congress to influence the Bush administration.

Gallo’s big gun was Dole. While the labeling debate raged, the Gallo family gave Dole’s campaign $105,000 in contributions, records show.

Dole presented Gallo’s case in a letter to Deputy Treasury Secretary John E. Robson on Feb. 7, 1992, several days before Robson would meet with officials from the Modesto winery. In the letter, co-signed by then-Sen. John Seymour, Dole wrote that “champagne is champagne, regardless of the production.”

Dole then turned up the pressure. Four Treasury Department officials who participated in the labeling case told The Times that Dole’s chief of staff, Sheila Burke, repeatedly inquired about the regulations throughout most of 1992. One Treasury source said Burke contacted the agency almost on a daily basis during the three-week period when the labeling rules were being rewritten.

“You don’t hear from the minority leader’s chief of staff all that often,” said one Treasury official contacted by Burke. Dole had made “a commitment to Gallo, [and] he was going to get [this case] ruled on to Gallo’s satisfaction.”

Burke confirmed in an interview last month that she kept in regular contact with Treasury officials. She also said that she spoke occasionally with Ernest Gallo and worked with him on an assortment of issues.

“I viewed [the Gallos] no differently than many of the people our office was contacted by,” Burke said. “They were given no different treatment.”

In January of 1993, Robson ruled in favor of Gallo and against the advice of Treasury’s technical experts. “Charmat method” and “fermented outside the bottle” replaced “bulk processed.”

Within a month, Gallo family members gave Dole’s campaign $55,000 in contributions. That same year, Gallo donated $100,000 to the Better America Foundation, a conservative think tank founded by Dole to support his political aspirations. The foundation was shut down last year following complaints that the organization served as a front for Dole’s presidential campaign.

From 1991 to 1994, the Gallo Foundation also contributed $705,000 to the Dole Foundation, a tax-exempt charitable group that provides job opportunities for disabled people.

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Donors to the Dole Foundation neither expected nor received any favors from the senator, a Dole Foundation spokesman said. Carl Rush, the first president of the Dole Foundation, holds a different view. In an interview last month, Rush said the charitable donations were regarded by Dole’s Senate and campaign staffers as “protection money” for a donor’s interests.

“I think a lot of folks wanted to find themselves in the good graces of the senator by having supported a charity that is very personally important to him,” Rush said.

Dole’s work for Gallo went well beyond the labeling issue.

In 1978, the Gallos lobbied for and won an amendment that spread inheritance tax payments over several years. The measure was introduced by Democratic Sen. Alan Cranston of California and received the support of Dole, who called it “the Gallo Wine amendment.”

In 1986, a loophole in a deficit-reduction bill--sought by the Gallos and supported by Dole--permitted the Gallo brothers to transfer up to $2 million to each of their 20 grandchildren without paying higher inheritance taxes. While the measure was under consideration, Ernest and Julio Gallo and their wives donated $20,000 in one day to Dole’s political action committee.

“Almost everybody [in the Senate] tries to help business constituents,” Cranston said. “[Dole] just developed a reputation for doing it very effectively . . . . “

Big Agriculture

Archer-Daniels-Midland Chairman Dwayne O. Andreas is a legendary benefactor to presidents and politicians of all stripes, from Richard Nixon to Bill Clinton. But perhaps no one has been more instrumental than Dole in helping Andreas obtain government support for his food processing company, which last year registered sales of $12.7 billion.

Last spring, in his final weeks as majority leader, Dole pulled a lever one last time for ADM.

Earlier in the year, the Republican chairman and ranking Democrat on the Senate Agriculture Committee agreed to raise $350 million in taxes to help restore the Florida Everglades. Their proposal, in effect, took back 2 cents of the 18 cents per pound that sugar growers receive from the government in price supports.

If the growers did the environmental damage to the Everglades, “our view was that the abusers should pay,” said Andrew Fisher, a top aide to committee chairman Sen. Richard G. Lugar (R-Ind.), who backed the tax plan. “As it worked out, the majority leader had another view.”

Dole succeeded in replacing the proposed 2-cent take-away with another plan. The Everglades project would receive $200 million directly from the U.S. Treasury. Growers would pay nothing. The unusual arrangement bypassed the congressional appropriation process and was not offset by budget cuts.

Rep. Bob Livingston (R-La.), chairman of the House Appropriations Committee, argued strenuously against the plan. “Do not create any more entitlements, and let us stop this foolishness or admit to the American people that we are not interested in balancing the budget,” he said.

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The Everglades legislation was a significant victory for Andreas. Among ADM’s most profitable commodities is high-fructose corn syrup, a sweetener for soft drinks and other products and whose price is tied to the cost of sugar.

Through its active support of the American Sugar Alliance, ADM has lobbied for the government price support program and opposed any tax on Florida sugar cane growers.

In an unrelated case, ADM announced this week that it has pleaded guilty and agreed to pay $100 million in fines for conspiring with competitors to fix the prices of two other agricultural products.

Andreas and ADM have given large sums to Republicans and Democrats. They have donated $1.7 million in soft money to the GOP since 1991 and $123,000 to Dole campaigns through individual and PAC contributions since 1980. Andreas and ADM also gave $100,000 to Dole’s Better America Foundation.

In addition, the Andreas Foundation and ADM have contributed $3 million to the American Red Cross since Elizabeth Hanford Dole became its president in 1991, Red Cross officials confirmed. And on at least 59 occasions since 1990, ADM provided the company’s private aircraft for Dole to travel on. While Dole is required by federal election law to pay the equivalent of first-class air fare for each trip--in this case $122,429 total--the amount covers only a fraction of the cost of operating a custom jet.

Andreas has said repeatedly that he has never lobbied Dole or any politician on issues affecting ADM, a company heavily dependent on the federal government.

At least 43% of ADM’s annual profits come from products that are subsidized or protected by the government, according to a 1995 study by the libertarian Cato Institute. “Congress’ expressed desire to foster a free marketplace cannot be taken seriously until ADM’s corporate hand is removed from the federal till,” the study said.

ADM has benefited most from federal subsidies of ethanol, the corn-based alcohol used as a gasoline additive. Ethanol producers have received about $6 billion in federal subsidies since 1980. ADM controls about two-thirds of the nation’s ethanol market, according to the Cato study.

Dole, who has been dubbed “Senator Ethanol” on Capitol Hill, has introduced or sponsored at least 34 bills, amendments and resolutions supporting ethanol, including a 1979 measure that created the equivalent of a 54-cents-per-gallon tax exemption.

Last year, after the House Ways & Means Committee passed legislation to trim $1.8 billion from the ethanol subsidy, Dole succeeded in derailing the bill. On Sept. 29, 1995, Dole and Republican Gov. Terry E. Branstad of Iowa, another corn-producing state, visited House Speaker Newt Gingrich (R-Ga.).

Dole, then leader of the Senate, told Gingrich “there was no way this was going anywhere in the Senate,” Branstad recalled in an interview last month.

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Dole’s aides say he backs ethanol because it helps farmers and the economy in Kansas. “It’s good agriculture policy, it’s good energy policy, it’s good for the environment, and according to government studies, it’s also a good deal for the taxpayers,” Martin, the Dole spokeswoman, said.

The benefits of ethanol, however, are the subject of intense debate. Other government studies have found that it provides no significant environmental benefits and the subsidy cannot be justified on economic grounds.

According to the Treasury Department, the ethanol tax exemption has taken about $6 billion from the federal Highway Trust Fund since 1983--money that ordinarily would pay for repairing federal highways.

Citing the drain on the highway fund, a prominent Reagan administration official testified in 1986 before the Senate public works committee that tax exemptions for ethanol, methanol and gasohol should be repealed. The official was Transportation Secretary Elizabeth Dole, who said: “We believe these exemptions are inappropriate.”

Tobacco Industry

Over the years, Dole has often come to the aid of tobacco firms, and they have been generous to him. Since 1986, they have contributed $239,150 to Dole’s campaigns and more than $6 million in soft money to the Republican Party.

The nation’s largest producer of smokeless tobacco, UST Inc., has flown Dole aboard the company’s private jets on at least 47 trips since 1990. Dole’s campaigns have reimbursed UST $132,939, a small portion of the actual cost.

A UST senior vice president, Edward D. Kratovil, who sits on the board of the Dole Foundation, is one of three tobacco executives who contributed $250,000 to the Better America Foundation.

The tobacco industry considers Dole a loyal supporter, according to a series of internal memos written in 1989 and 1990 by a Washington representative for Philip Morris Cos., the top U.S. cigarette maker. One memo described Dole as “too valuable a friend” to alienate over issues unrelated to tobacco.

Dole and Sen. Jesse Helms (R-N.C.) joined forces in the 1980s to protect tobacco’s interests. In 1985, Helms failed to muster enough votes in his Agriculture Committee to overhaul a government price support program for the benefit of tobacco companies. Dole, as majority leader, came to the rescue by attaching it to Finance Committee legislation.

Democrats protested that it was unheard of for the Finance Committee to handle major farm legislation. “I don’t know anything about it,” Sen. Daniel Patrick Moynihan (D-N.Y.) said at the time. “It’s convoluted, it’s complex . . . and almost certainly it’s bad.”

Dole’s measure passed despite the warnings of Reagan administration Budget Director James C. Miller III, who predicted that $1.1 billion in federal revenue would be lost.

At the same time, Dole went to bat for the smokeless tobacco industry, replacing a proposal by Sen. Bill Bradley (D-N.J.) for a new federal excise tax of $1.20 per pound on snuff with an industry-sponsored measure of 24 cents per pound--a change that cost the federal treasury an estimated $535 million over the past decade.

“Rolling Bradley wasn’t difficult,” Michael Kerrigan, then a lobbyist for the Smokeless Tobacco Council, said last month. “Dole was the [majority] leader. Who better to get to make sure they’re going to sign off” on the lower tax?

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In 1986, three senators from tobacco-growing states joined Dole in writing to a top Hong Kong official on behalf of UST protesting the Hong Kong government’s plan to ban the import of smokeless tobacco products.

The Reagan administration’s surgeon general, Dr. C. Everett Koop, was highly critical of the senators’ efforts. In his memoirs, Koop wrote: “I imagine they thought it was more important to save a Connecticut firm’s profits than Asian lives.”

Times staff writer Josh Greenberg and researcher Robin Cochran contributed to this story.