By R. Jeffrey Smith
Washington Post Staff Writer
Friday, September 23, 2005
Republican lobbyist Jack Abramoff bragged two years ago that he was in contact with White House political aide Karl Rove on behalf of a large, Bermuda-based corporation that wanted to avoid incurring some taxes and continue receiving federal contracts, according to a written statement by President Bush's nominee to be deputy attorney general.
Timothy E. Flanigan, general counsel for conglomerate Tyco International Ltd., said in a statement to the Senate Judiciary Committee last week that Abramoff's lobbying firm initially boasted that Abramoff could help Tyco fend off a special liability tax because he "had good relationships with members of Congress," including House Majority Leader Tom DeLay (R-Tex.).
Abramoff later said "he had contact with Mr. Karl Rove" about the issue, according to the statement by Flanigan, who oversaw Tyco's dealings with Abramoff and his firm and received reports from Abramoff about progress in the lobbying campaign. Flanigan's statement is the latest indication that Abramoff promoted himself as having ready access to senior officials in the Bush administration.
A White House spokeswoman, Erin Healy, said Rove "has no recollection" of being contacted by Abramoff about Tyco's concerns.
Abramoff was indicted last month on unrelated wire fraud and conspiracy charges and has lost his high-stakes lobbying clients. He was hired in 2003 by Tyco when the company was in turmoil. Abramoff's firm, Greenberg Traurig, promoted him as Tyco's savior on the tax issue, according to Flanigan's statement and others familiar with the process.
Tyco -- whose executive L. Dennis Kozlowski had just departed under an ethics cloud -- was worried that the Bush administration might embrace legislation promoted by Democrats that would impose higher taxes on domestic-centered companies that had moved offshore to cut their tax bills. The legislation was motivated by popular anger over such offshore moves, and carried the additional penalty of barring such firms from receiving federal contracts.
Lobbying disclosure statements filed by Abramoff listing his work for Tyco cite the "Executive Office of the President" as one of his lobbying targets on the tax and contracts issues. Others were the Department of Commerce, the General Services Administration and Congress. Greenberg Traurig records submitted to Tyco describe specific contacts with the White House legislative office, a source familiar with the matter said yesterday.
Rove's personal assistant at the time, Susan Ralston, formerly worked as Abramoff's secretary. It could not be learned yesterday whether she was among those contacted by any of the 14-person Greenberg team recorded as working on the Tyco account.
The Bush administration was never enthusiastic about the tax penalty, but both the House and Senate approved language in 2002 denying federal contracts to companies largely based in the United States but incorporated in tax havens.
Tyco was among a raft of companies, including Ingersoll-Rand and Noble Corp., that hired an army of lobbyists to stall the legislation and ultimately kill most of it. House Republican leaders argued that corporate flight was merely a symptom of a much broader problem with the U.S. tax code that should be treated in a larger tax reform package.
Abramoff remains the focus of a lengthy investigation by a task force led by prosecutors at the Justice Department and including investigators at the Internal Revenue Service, the Interior Department and General Services Administration. The probe was initially focused on whether he bilked Native American tribes that paid him tens of millions of dollars in lobbying and other fees, but has since widened to include other matters.
Flanigan, who is still at Tyco while awaiting a committee vote on his nomination, said in his Sept. 15 written statement that he would "consult with DOJ ethics officials . . . and apply normal recusal standards" about the Justice Department's investigation of Abramoff.
Flanigan said he would recuse himself from any Abramoff investigation involving Tyco. Portions of his statement were first reported in the Los Angeles Times.
The ties between Tyco and Greenberg Traurig have already been investigated by a special counsel appointed by Greenberg to examine Abramoff's activities at the firm. According to knowledgeable sources and Flanigan's written statement, Greenberg has promised to repay three-quarters of a $2 million fee that Tyco paid, at Abramoff's direction, to a firm called Grassroots Interactive.
The fee was supposed to finance a letter-writing campaign by Tyco suppliers against the offshore tax bill, but Greenberg concluded that $1.5 million of it was "diverted to entities controlled by Mr. Abramoff" and misspent, according to Flanigan's statement.
Andrew Blum, a spokesman for Abramoff's law firm, declined to comment, as did Jill Perry, a spokeswoman for Greenberg Traurig.
Staff reporter Jonathan Weisman contributed to this report.