Foreign Lobbies Took the Guise Of Nonprofits
Friday, November 3, 2006
Early last year, two little-known nonprofit groups paid for Rep. John T. Doolittle (R-Calif.) and his 12-year-old daughter to travel to South Korea and Malaysia. Their last stop was the Berjaya Beach & Spa Resort on the Malaysian island of Langkawi, where they bunked at an oceanfront chalet staffed with a personal butler, got massages and rode water scooters on Burau Bay.
Doolittle's junket, which cost $29,400, was among the most expensive privately sponsored trips by members of Congress in recent years. The two groups that split the bills were not ordinary nonprofits. They were fronts for vigorous lobbying campaigns bankrolled by foreign entities and were operated by a Washington lobbying firm, Alexander Strategy Group, according to public records and people who worked with the firm.
For five years beginning in 2001, the Korea-U.S. Exchange Council and the U.S.-Malaysia Exchange Association treated 12 members of Congress and 31 Capitol Hill staffers and their relatives to nearly $500,000 in trips that included stops at U.S. and overseas resorts, records show.
The two nonprofits and the lobbying firm behind them have drawn the attention of the FBI. People associated with Alexander Strategy, who spoke on the condition of anonymity, said federal investigators have asked them whether the groups were conduits for a foreign government and a foreign corporation to finance congressional junkets.
Records show that the Korea-U.S. Exchange Council was funded by the Hanwha Group, a South Korean conglomerate. The stated goal was to enhance the influence of Hanwha's chairman, Seung Youn Kim, a controversial figure once jailed for violating Korean financial law in his purchase of Sylvester Stallone's Hollywood mansion. Lobbyists for the U.S.-Malaysia Exchange Association filed reports stating that their funds came from a Malaysian energy firm and that the work was "on behalf of the government of Malaysia."
Federal law prohibits members of Congress from knowingly accepting overseas travel from foreign governments except as part of a cultural interchange program approved by the State Department. The travel in this case was not part of such a program, government officials said. House rules ban members from taking trips paid for by lobbyists or foreign agents. Nonprofits and their officers are prohibited under federal tax law from using a charitable organization for private commercial gain.
Once a major lobbying firm, Alexander Strategy Group closed down early this year. Its owner, Edwin A. Buckham, former chief of staff to now-departed House majority leader Tom DeLay, is under investigation in the Jack Abramoff lobbying scandal, according to lawyers and witnesses with knowledge of the probe. Authorities are also reviewing Buckham's use in the 1990s of another nonprofit, the U.S. Family Network, the sources said.
The Korean and Malaysian nonprofits were created in 2001. Their combined budgets of more than $2.5 million, as well as their checkbooks and operations, were controlled by Alexander Strategy, according to people affiliated with the firm at the time. Records show that Alexander Strategy took in $620,000 in fees for its work on the Malaysia account. A Hanwha subsidiary in the United States, Universal Bearings Inc., paid the lobbyists $940,000 for the Korea work.
The nonprofit groups, on the strength of Buckham's GOP connections, sponsored trips for Republican House members DeLay; Doolittle; Ileana Ros-Lehtinen, Ander Crenshaw and Tom Feeney of Florida; John Carter of Texas; Scott Garrett of New Jersey; and Roger Wicker of Mississippi.
Buckham had a strategic alliance with a Democratic lobbying firm, the Harbour Group, located in the same building on K Street. Harbour received about $500,000 in fees from the two nonprofits, according to tax and lobbying disclosure records. The firm arranged for trips taken by Democrats including Rep. Earl Pomeroy of North Dakota, Rep. Jim McDermott of Washington, Rep. Mike Honda of California and Del. Eni F. H. Faleomavaega of American Samoa. Harbour also arranged for former president Bill Clinton, who was on his own Asian trip, to meet with Hanwha officials in Seoul and Beijing.
Some of the lawmakers on the trips were in positions to help other Alexander Strategy clients. Doolittle, who serves on the House Appropriations Committee, told The Washington Post this year that from 2002 to 2005 he sponsored $37 million in spending-bill earmarks that went to a firm controlled by a key Alexander Strategy client. The client, Brent R. Wilkes, is a target of the federal investigation stemming from the bribery case and guilty plea of former representative Randy "Duke" Cunningham (R-Calif.). Doolittle's wife, Julie Doolittle, was hired by Alexander Strategy to help keep the books for the Korean nonprofit.
Buckham and Edward Stewart, who had been his top associate at Alexander Strategy, declined to be interviewed for this article.