Lobbying & Law - Abramoff's and DeLay's Scottish Links

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

Jack Abramoff had a hot invitation for his lobbying clients -- an opportunity to hang out with Rep. Tom DeLay, R-Texas, during an expensive overseas junket.

It was early 2000, and Abramoff, then a big rainmaker at the firm Preston Gates Ellis & Rouvelas Meeds, was working with a conservative think tank to put together a trip to London and Scotland for then-House Majority Whip DeLay and two of his top staffers. Abramoff extended an invitation to two clients he was cultivating for more business, as well as to one potential client, to join part of the 10-day "educational" junket -- which included a few days of golfing at Scotland's famous St. Andrews Links -- slated for late May and early June of that year.

According to an Abramoff document from 2000 and to sources familiar with the trip's planning, the invitees included lobbyist Terry Martin of the Chitimacha Tribe of Louisiana; Russian energy magnate Alex Koulakovsky, a friend of Abramoff's who had dined in Moscow with DeLay and the lobbyist in 1997; and garment-industry executive Willie Tan from the Commonwealth of the Northern Mariana Islands, also an old buddy of Abramoff and DeLay.

In early March 2000, Abramoff encouraged Martin to come on the trip, promising he would get a chance to play golf. According to a Preston Gates document, Abramoff told Martin that he had talked to DeLay's then-Deputy Chief of Staff Tony Rudy, who had said that DeLay would be visiting Scotland for a few days of golfing.

Abramoff also told Martin that he was working up a preliminary budget for the trip and that the estimated cost for each client would be roughly $6,000, plus airfare. It is not known whether Abramoff's clients ever paid their share of expenses.

It seems clear, however, that Abramoff's decision to invite his current and potential clients was a smart business move. In September 2000, just a few months after the trip, Abramoff and Preston Gates registered to lobby for the Chitimacha tribe on Capitol Hill. Martin did not return calls seeking comment.

The trip also helped to cement Abramoff's relationship with Koulakovsky, as well as his ties to Tan and his industry colleagues in the Marianas.

"The trip was a win-win-win for Jack," said a lobbyist and a former colleague of Abramoff's. "He was able to get several potential and existing clients in front of the most powerful man in Washington."

Over the past few months, DeLay has said consistently that his trip to London and Scotland in 2000 was an educational one that included meetings with former British Prime Minister Margaret Thatcher and with Scottish parliamentarians. He has noted that the trip was officially sponsored by the National Center for Public Policy Research, a think tank for which Abramoff was then a board member.

The new details about Abramoff's clients' participation in the junket are the latest twist in the still-unfolding story about Abramoff's lobbying practices. The trip has generated political heat for DeLay, who is now the House majority leader.

Reports published earlier this year in National Journal and The Washington Post about the trip indicated that Abramoff initially paid thousands of dollars of expenses for the majority whip on the 2000 trip. The reports helped spark a House Ethics Committee inquiry into some of DeLay's overseas travels. Under House rules, members and staff are barred from having lobbyists pay their travel expenses.

Meanwhile, the Senate Indian Affairs Committee, a federal grand jury, and an interagency federal task force that includes the FBI are looking into allegations of criminal activities, including tax fraud and public corruption, related to $82 million in fees that six Indian tribes with gambling operations paid to Abramoff and to public-relations man and former DeLay aide Michael Scanlon over several years. Two sources familiar with the FBI probe say that investigators are interested in how the England-Scotland trip in 2000 was organized and funded.

Some ethics experts and legal analysts say that Abramoff's apparent use of the trip to promote his own business interests might cause headaches for DeLay.

Stan Brand, a former House counsel, said that the presence of Abramoff's clients on the trip "casts the trip in a different light -- as a business development trip for Jack. It makes it harder to characterize the trip as officially related business."

"The fact that Abramoff invited would-be and current clients to come on the trip potentially raises new questions," commented Ken Gross, a lawyer at Skadden, Arps, Slate, Meagher & Flom, "but it does not constitute an ethics violation in and of itself."

In a statement, DeLay's outside attorney, Richard Cullen, said, "Tom DeLay has stated repeatedly that he believes he has at all times conformed with House rules. He believed that the trip to the U.K. was, in all respects, organized and handled appropriately."

According to House travel records, the National Center for Public Policy Research paid close to $70,000 in trip expenses for DeLay, his then-Chief of Staff Susan Hirschmann and her husband, and Rudy and his wife. (Seven months later, Rudy went to work with Abramoff at Greenberg Traurig.) Lobbyist Ed Buckham, a former chief of staff to DeLay, also went along on the trip; like his fellow lobbyist Abramoff, Buckham reportedly paid some of DeLay's travel costs.

Some $50,000 of the trip expenses paid for by the center came from donations raised by Abramoff, who had persuaded two of his gambling clients -- the Mississippi Band of Choctaw Indians and the online company eLottery -- to make the contributions. Both the Choctaws and eLottery have said that they thought their donations to the center were for other purposes and that they did not know the money was used to pay for the trip.

In July 2000, shortly after the trip, DeLay voted on the House floor in a successful effort to defeat a bill to regulate Internet gambling -- a bill that eLottery had strongly opposed. A DeLay spokesman has said that the congressman opposed the bill because it exempted other forms of gambling, such as jai alai and horse and dog racing, from regulation.

Amy Ridenour, the president of the center, testified at a Senate hearing last month that DeLay didn't know about the donations to the center from Abramoff's clients. She said she was surprised to learn that Abramoff, who organized the trip because Ridenour was pregnant at the time, had added St. Andrews to an itinerary that had originally been focused on educational meetings. "The trip seems to be very different than what I expected," she said.

The center was also listed on official travel records as the sponsor of a trip to Moscow in 1997 by Abramoff, DeLay, and a few of DeLay's aides. Sources say that the trip was indirectly financed through the center by the offshore company Chelsea Commercial Enterprises, which was a client of Abramoff's and was affiliated with Russian-based Naftasib, where Koulakovsky was the general manager. Several months before the 2000 trip to London and Scotland, Koulakovsky appears to have gotten involved with Abramoff again.

Former colleagues of Abramoff and an e-mail sent to Abramoff indicate that Koulakovsky had financial links to the Dutch company Voor Huisen Project Management, which hired Abramoff and Preston Gates to represent it in Washington. Among the company's key goals was to build congressional support for private housing markets in Russia, according to lobbying registration forms.

Koulakovsky -- who, sources say, had been taking golf lessons at Abramoff's urging -- joined Abramoff and DeLay on the links at St. Andrews and also attended a lavish dinner at a Scottish castle. Earlier this year, The Wall Street Journal first reported that Koulakovsky was on the trip and that Abramoff had invited someone from a Louisiana Indian tribe.

Abramoff's work for Voor Huisen lapsed briefly in the second half of 2000. But after Abramoff moved to a new firm, Greenberg Traurig, in early 2001, Voor Huisen became a lucrative client for three years running. In the first six months of 2001, records show that Voor Huisen paid Greenberg $300,000 in lobbying fees.

Similarly, Willie Tan was no stranger to Abramoff, who had represented the Marianas since 1995, or to DeLay, who has been a champion in Congress for the U.S. territory's effort to remain free from federal labor and minimum-wage laws. Avoiding the U.S. pay and labor rules is a priority for the island's garment industry, which is dependent on immigrant workers.

Tan had met DeLay over the 1997-98 New Year's holiday, when the Texan had visited the Marianas and Tan had hailed him publicly as a key ally in the fight against Democrats' efforts to impose federal labor laws on the territory.

According to sources familiar with the 2000 trip, Tan dined with Abramoff and DeLay in London. Sources say that, at about the same time, Tan was playing a role in persuading the Marianas government to renew a lobbying contract with Abramoff that had expired a year earlier.

The islands signed a new $1.6 million contract with Abramoff several months after Tan's right-hand man, Ben Fitial, was elected in early 2000 as speaker of the island government's legislature. Before the election, Buckham and Scanlon had traveled to the Marianas to lobby other members of the legislative body to help Fitial win his position.

Tan was a leader of two garment-industry groups in the Marianas, one of which hired Abramoff in 1999 at Preston Gates; the other hired Abramoff in 2001, after he moved to Greenberg Traurig.

In a statement, Preston Gates said, "We continue to learn from press reports and testimony in congressional hearings that in the months running up to his departure from the firm, Mr. Abramoff engaged in certain activities that he did not disclose to the firm."

Through a spokesman, Abramoff declined to comment.

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