Few Campaign Refunds in Tyco Scandal

Posted October 31, 2003 at 5:24pm

As a New York jury weighs Dennis Kozlowski’s fate on tax evasion, larceny and fraud charges, some campaign officials in Washington are faced with their own dilemma — what to do with contributions they received from the ex-CEO of Tyco International.

Kozlowski — whose penchant for $6,000 shower curtains and $15,000 umbrella stands has made him a poster boy for corporate greed — lavished money on several Republican candidates during the years he is accused of looting Tyco’s coffers, Federal Election Commission data shows.

From 1997 to 2001, Kozlowski, who has pleaded innocent in the case, gave more than $25,000 in political contributions mostly to GOP Senators, party committees and presidential hopefuls. He contributed several thousand more to state candidates and political causes in New Hampshire.

Most of the political recipients of Kozlowski’s largess have opted simply to keep the funds.

“That money was spent long ago,” said Carl Forti, spokesman for the National Republican Congressional Committee, which received $10,000 in soft money from Kozlowski in 2000 but has no plans to try to refund the money, even as more lurid details of Kozlowski’s alleged scheme emerged in the courtroom last week. Jurors were shown excerpts from a video of a $2 million birthday party Kozlowski threw for his wife on the Italian island of Sardinia, allegedly on Tyco’s dime.

The Democratic National Committee used the same rationale last year when it opted to keep $56,500 received from Sam Waksal, the indicted chief of ImClone, who was caught up in an insider trading scandal along with home designing mogul Martha Stewart.

Others campaign officials said the age of the Kozlowski donations — which by all indications were perfectly legal — made refunds impossible, or irrelevant.

Sen. Elizabeth Dole (R-N.C.) decided to keep the $1,000 Kozlowski gave her presidential exploratory committee in 1999. The former CEO served as a member of her New Hampshire leadership team, but a Dole aide said it would be next to impossible to return the money at this point.

Dole dissolved her presidential exploratory committee in 2001, according to FEC records. Her spokesman acknowledged that if the contribution had been made to her more recent Senate campaign, campaign officials would have likely taken a harder took at it.

New Hampshire Sen. John Sununu (R), on the other hand, isn’t taking any chances — the first-termer has opted to “disgorge” the $1,000 he received from Kozlowski in 2001, the Senator’s spokeswoman said. He made a contribution of the same amount to the Sandy Point Discovery Center in Stratham, N.H.

But Sununu is clearly in the minority in handling this moral quandary.

While lawmakers rushed to return money from Enron when the company was enveloped in scandal, the rush to dump funds from troubled corporations seems to be evaporating.

A search of FEC records for donations from legally and ethically challenged corporate giants reveals that the vast majority of political recipients of such campaign cash are opting to keep the funds.

Last year, Sen. Carl Levin (D-Mich.) was one of just a handful of lawmakers to return contributions received from Waksal, who made had about $75,000 in political contributions since 1999.

“Any contributions that have come in improperly, of course, should be returned,” Levin said during an appearance on NBC’s “Meet the Press” last year. “That goes without saying. If a contribution comes from a source which is polluted, it seems to me those contributions should be returned, too.”

John Rigas, the CEO of Adelphia Communications who has been charged with securities fraud, personally gave more than $25,000 to federal campaigns and political committees since 1999. (Along with his sons and the company’s corporate political action committee, Adelphia’s support for federal candidates topped $200,000.)

But it appears that few, if any, lawmakers have returned the money — and with good reason, some say.

“There’s no reason to give the money back,” Paul Feenstra, a spokesman for Rep. John Peterson (R-Pa.), who received $5,000 from Rigas, told the Buffalo News. “In the case of Enron, there were accusations that contributions were given to gain influence. There’s none of that here.”

The Enron and WorldCom cases were exceptional because the employees of those corporations exerted public pressure on politicians to cough up the campaign cash they’d received.

Moreover, they even created special receptacles to accept the money on behalf of employees — the Ex-WorldCom Employee Assistance Fund and the Enron Employee Transition Fund — and in doing so combated another perplexing issue for politicians who aren’t necessarily eager to return money to indicted CEOs or corporations operating under a cloud.

Eighteen lawmakers donated more than $60,000 to the Ex-WorldCom charity, according to FEC records, while the Enron employees’ fund received more than $118,000 in support from Members of Congress trying to dispose of Enron contributions.

Several sources noted that giving up the contributions to avoid any appearance of impropriety — despite the fact that they may be perfectly legal — is a good insurance policy, particularly during campaign season when just about anything can be used as ammunition.

During a debate last fall between Rep. Mike Ferguson (R-N.J.) and his opponent, Democrat Tim Carden, Ferguson responded to attacks that he was taking special interest money by asking Carden about a contribution he had received from Harlan Waksal, Sam Waksal’s brother.

“How do you reconcile your railing against the special interests on one side and the fact that you, in fact, could be president and CEO of Special Interests Inc.?” Ferguson asked.

Carden replied that Harlan Waksal was not under indictment — Sam was — but nevertheless, Carden admitted he had returned the contribution in question.