03-19-2005

Lobbying & Law - Mr. Kim Comes to Washington

Peter H. Stone (Email this author)
© National Journal Group, Inc.

On the evening of May 13, 2003, House Majority Leader Tom DeLay, R-Texas, had a private dinner with an unusual companion. At the upscale Capitol Hill restaurant Bistro Bis, DeLay dined with Kim Seung-yeon, the powerful chairman of one of South Korea's largest conglomerates, the Hanwha Group, which has far-flung interests in such businesses as insurance, energy, chemicals, and explosives.

The dinner was a reunion of sorts. The two men had become acquainted in August 2001 when DeLay and his wife, Christine, and two other House members and their spouses took an educational junket to South Korea that was underwritten by the Korea-U.S. Exchange Council, a group that Kim leads and largely funds.

Recently, the council has become radioactive on Capitol Hill.

Because it is registered with the Justice Department as a foreign agent, the council is barred under House ethics rules from paying travel expenses or gratuities for House members and staff. But since its inception almost four years ago, the council has financed at least four trips to Seoul for House members from both parties, as well as two trips to the South Korean capital for congressional staff.

The most prominent of those was the August 2001 trip. The council paid $28,000 in expenses for the DeLays, according to congressional travel records. Also on the trip were Reps. Ileana Ros-Lehtinen, R-Fla., and Ander Crenshaw, R-Fla., and their spouses; their expenses totaled slightly less than $56,000.

But the council was not strictly a foreign import. It was created in June 2001 with a big helping hand from Alexander Strategy Group, a lobbying firm run by Ed Buckham, DeLay's former chief of staff. The council's mission, according to a game plan written by Alexander Strategy Group in February 2001, was to bolster Kim's ties to congressional lawmakers and other influential people in Washington, and to help Kim become the "leading Korean business statesman" between the United States and South Korea. The council's genesis and its efforts to pump up Kim's political and business clout offer an intriguing snapshot of an unusual Washington lobbying operation that was put together by some of DeLay's closest K Street allies. Moreover, from the outset, Alexander Strategy Group seems to have tapped Heritage Foundation President Edwin Feulner as an ally in the campaign to boost Kim's stature in Washington. Feulner has served on the board of the council since its inception, and he said that Heritage has no other role with the council.

The five-page game plan for enhancing Kim's status and launching the council had four authors: Buckham; Linda Feulner, Edwin Feulner's wife; Ken Sheffer, who works as a Hong Kong-based counselor to Edwin Feulner and has been a counselor to Alexander Strategy Group; and Ed Stewart, a partner at Alexander Strategy Group and the council's assistant secretary.

Neither Linda Feulner nor Buckham responded to requests for comment.

The council seems to have been well funded. According to a disclosure report that the council filed with Justice under the Foreign Agents Registration Act, the group received almost $630,000 in contributions from mid-2003 to mid-2004, the most recent period available. The lion's share of the money, according to the sources, came from Kim and his company. One former U.S. government official with Korea experience points out that Hanwha Group, which started in the explosives business under "Dynamite Kim," the father of the current chairman, has a history of currying favor with powerful U.S. politicians. "It's kind of an old-style chaebol," this source said, using the Korean term for "conglomerate." The source added that Hanwha "for years has gotten close to key American officials and been very friendly and generous to them."

Besides DeLay, Ros-Lehtinen, and Crenshaw, other members who traveled to Korea under the council's auspices included Reps. Earl Pomeroy, D-N.D., Donald Payne, D-N.J., Tom Feeney, R-Fla., and John Doolittle, R-Calif. After CongressDaily and The Washington Post revealed on March 10 that the trips apparently violated House ethics rules, Stewart issued a statement on behalf of the council, saying that it had received verbal approval from the Ethics Committee for the August 2001 trip, and that the council had never informed lawmakers of its registration as a foreign agent. DeLay and the other lawmakers whose travel expenses were paid by the council said they were unaware of the council's foreign-agent status.

Moreover, the council underwrote dinners and other events, among them an August 2003 retreat at the Greenbrier resort for eight senior congressional staffers. It cost $57,000, according to the council's disclosure to Justice.

South Korean analysts note that for an ambitious businessman like Kim, courting congressional allies in Washington could pay big benefits back home in Seoul. In recent years, Kim has been trying to expand his enterprises while also fending off a nasty bribery probe by the South Korean government into Hanwha's 2002 acquisition of a large insurance company, in a deal that allegedly involved political payoffs.

Last September, according to Korean press reports, Kim was sentenced to eight months in prison for "political funding" violations, but the sentence was reduced on appeal, and he was fined about $30,000.

"The more Kim's in trouble in Korea, the greater his need to develop contacts in Washington," said one longtime South Korean observer.

The idea for a Korea-U.S. Exchange Council was apparently hatched after Kim attended President Bush's first inaugural in January 2001 as the guest of Sen. Mitch McConnell, R-Ky. During that visit to Washington, Kim also gave a talk at the Heritage Foundation. (McConnell's wife, Secretary of Labor Elaine Chao, once was a key official for Heritage's Asia programs.) Kim has said that the council was born out of discussions during that visit to Washington. The following month, Alexander Strategy Group put together the five-page strategy document.

The lobbying shop suggested several joint events by the council and Heritage, which over the years has received some funds from South Korean entities. Six months later, in August 2001, Edwin Feulner as well as Buckham accompanied the DeLays and the other congressional couples on the first trip to South Korea.

The Alexander Strategy Group proposal also suggested that U.S. lawmakers visit Hanwha facilities in South Korea on council-funded trips. And the proposal concluded that if Kim followed the game plan, Hanwha's "global position will be strengthened." To help implement the plan, the council hired Alexander Strategy Group as its lobbyist from August 2001 through April 2002.

Stewart, however, sent an e-mail to National Journal saying that the council's attorneys are looking at whether the council ever needed to file with Justice as a foreign agent, since it has not received any money from the government of South Korea. Depending on what the attorneys recommend, the council's board of directors will "correct the situation as expeditiously as possible," Stewart's e-mail said.

Moreover, after the recent news reports disclosed the payments for the congressional trips, former Secretary of State Henry Kissinger, who has served on the council's board, wrote to Edwin Feulner, saying he is withdrawing from the board pending the resolution of the council's status as a foreign agent.

The council isn't the only Asian project for which a Heritage player appears to have teamed up with Alexander Strategy Group. Last fall, Alexander Strategy inked a $70,000-a-month deal to represent the government of Malaysia as a subcontractor to the Hong Kong-based firm Belle Haven Consultants. Belle Haven's principal is Sheffer, the counselor to Heritage President Feulner.

The Malaysia-Sheffer-Alexander Strategy Group relationship may have had its origins in the same council-paid August 2001 trip to Seoul by Buckham, Feulner, and DeLay. After leaving Korea, the group spent a couple of days in Kuala Lumpur, Malaysia's capital, and the Heritage Foundation picked up the tab.

 

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