Speaker Sets $150,000 Limit on Borrowing From Dole
By John E. Yang
The speaker paid the first $50,000 installment with a check to the U.S. Treasury at 2:20 p.m. yesterday.
Under the arrangement, which the House ethics committee approved yesterday, Gingrich is paying more from personal funds than had been envisioned four weeks ago when he made the stunning announcement that Dole had agreed to lend him the entire sum of $300,000. While that pronouncement calmed uneasy House Republicans, it triggered complaints from Democrats and some commentators that the loan was a sweetheart deal and amounted to a gift.
After reflecting on the situation as attorneys for Gingrich, Dole and the ethics committee worked out the details of the loan, the speaker and his wife, Marianne, decided they could pay more from personal funds than they had originally thought, Gingrich aides said last night.
"The speaker wanted to pay as much from personal funds as possible," Gingrich press secretary Christina Martin said. Gingrich did not make a statement.
The outlines of the new agreement were proposed to ethics committee Chairman James V. Hansen (R-Utah) and Rep. Howard L. Berman (Calif.), the panel's top Democrat, in an April 30 letter from J. Randolph Evans, Gingrich's ethics attorney. It was unclear last night whether Evans was responding to a request from the committee or was initiating changes.
While the speaker's payment will be stretched over 21 months, rather than being made in one lump-sum, Martin said Gingrich, who is paid $171,500 a year as speaker, hopes to pay as much of it as possible without borrowing from Dole. Dole has agreed to lend Gingrich as much as $150,000 at 10 percent interest on Jan. 2, 1999, so the speaker may make the final payment to the Treasury on that day.
Gingrich has said he would not remain in Congress beyond Jan. 3, 2003.
In addition, the loan agreement requires Gingrich to make twice-yearly interest payments of $7,500, although the principal will not be due until Jan. 2, 2005. Under the terms announced last month, Gingrich did not have to make any payment -- interest or principal -- until the end of the loan term.
Collateral for the loan will be the income, royalties and proceeds from the publication of an as-yet-unwritten book and his residence in Marietta, Ga. The book would be the fulfillment of his 1995 two-book contract with HarperCollins Publishing Inc.
The first book was the best-selling "To Renew America," for which he was paid $1.2 million in royalties in 1995. After expenses and a donation to charity, he was left with $424,000.
Most of Gingrich's holdings, including a money market fund and three other investments, are in his wife's name.
The loan terms also specify that:
Dole cannot forgive the loan.
Gingrich will use only personal assets to repay the loan and "shall not collect or otherwise accept any amount from any source . . . for the repayment."
Gingrich would use his Individual Retirement Accounts to pay any outstanding money he owes Dole if the loan is not repaid according to the terms.
Dole will make the loan using only money he had on hand May 1, before he went to work for the Washington law firm of Verner, Liipfert, Bernhard, McPherson and Hand, and none of the loaned money "shall come from any proceeds associated with the law firm."
Partners in the law firm wanted to ensure that the firm was insulated from any repercussions from Dole's loan to Gingrich.
Dole cannot communicate with Gingrich, directly or indirectly, on behalf of any of his law firm's clients while the loan agreement is in force.
If Dole registers as a lobbyist, Gingrich must find another lender.
In a letter to Gingrich, Hansen and Berman, currently the ethics committee's only members, said the loan terms were "commercially reasonable" -- the House rule's standard for loans to lawmakers from individuals -- "and in conformance with applicable House rules and standards."
Gingrich agreed to pay the $300,000 penalty in four installments, with three $50,000 payments due yesterday, June 1, 1998, and Nov. 30, 1998, and a final $150,000 payment due Jan. 2, 1999.
Any missed payments will be assessed interest.
Payment of the $300,000 was among the most difficult hurdles Gingrich faces in trying to rehabilitate his public image. The House imposed it Jan. 21 on a 395 to 28 vote.
One month to the day before, Gingrich had admitted he brought discredit to the House and broke its rules by failing to ensure that financing for two projects, including a college course he once taught, would not violate federal tax law and by giving the ethics committee untrue information.
In exchange for the ethics panel agreeing to modify the charges against him, Gingrich agreed to a reprimand by the House and the financial penalty.
The penalty has been described as a "cost assessment" or "reimbursement" to the ethics committee to cover some of the costs of its investigation into Gingrich rather than a "fine."
As such, Gingrich has said his attorneys are considering deducting it from his income taxes as a work-related expense.
Staff writer Dan Balz contributed to this report.
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