Shortly after 5:30 p.m. on March 25, a Jetstar belonging to one of the nation's major mineral companies took off from National Airport for New Orleans. Ordinarily the jet shuttles Freeport-McMoRan executives from place to place.
On that day it carried several guests: James Healey Jr., assistant to Rep. Dan Rostenkowski (D-Ill.), chairman of the House Ways and Means Committee; Robert Leonard, chief tax counsel of the committee, and James E. Ritchie, a lobbyist for Nevada casinos and off-track betting groups.
It was the beginning of a three-day weekend of door-to-door limousine service, a luxury hotel, elegant restaurants, and seats in the governor's box in the Superdome for the NCAA basketball semifinals. In between was a day's visit to offshore mining operations and talk of minerals.
The trip--costing more than $1,000 a person, including comparable air fare--was paid for by Freeport-McMoRan Inc. Pending legislation could have a multimillion-dollar impact on the company's tax liability.
The New Orleans weekend is one of several trips sponsored by corporations and trade associations interested in presenting their views to senior staffers of the powerful Ways and Means Committee, which writes all tax laws. Others have included trips to a Lake Tahoe resort, a Las Vegas resort, and a basketball tournament in Hartford.
The trips provide interest groups with extended access to influential staff workers who advise committee members on tax matters that directly affect the sponsoring companies. They are legal as long as official business is discussed.
Under House ethics rules, payment of meals, lodging and travel is permitted in conjunction with "fact-finding" trips as long as the activity bears "a direct relationship to official duties."
But, says Harry T. Cone of the House Committee on Standards of Official Conduct, "the rules make it clear that these things are not supposed to be disguised vacations."
Such trips do not have to be reported and generally are not. Only staffers designated as a member's "principal assistant" or those few who made more than $54,700 last year are subject to reporting requirements. Lobbyists often don't report them because, they say, the object of their attention is not specific legislation but rather access and familiarity.
John Sherman, press secretary to Ways and Means Chairman Rostenkowski, says the staffers' trips are information-gathering and a necessary and accepted part of life in the capital.
"Washington is a casual sort of 'let's-have-lunch, let's-go-to-New Orleans' kind of town," Sherman said. "It's all done informally. There is a steady sort of nodding of heads here."
"The whole purpose of the luncheons is to get personal relations with the people so they know you and trust you," said lobbyist R. Duffy Wall, vice president of Freeport-McMoRan. "I have great friends on Capitol Hill that I lobby--personal friends. Lobbying and friendship is blurred . . . . Friendships develop--they have to and it's healthy . . . . Whether they're my best friends in the world or not, it's going to have to mesh with their own sense of right and wrong."
On July 16, 1980, the temperature at the Capitol reached a record 103 degrees. Then-Ways and Means senior staffer James Healey Jr., his wife, Susan, and their two young children escaped the heat at a casino-resort in Lake Tahoe, where the high for the day was 79.
The five-day trip was arranged by lobbyist Ritchie and paid for by Harrah's, a 545-room resort situated in the Sierra mountains. Harrah's has one of the largest casinos in the world, computerized bars in every bedroom, and cabaret shows.
Hotel records show the bill came to more than $3,000: $1,134 for two rooms; $488.03 for meals; and $1,399 in air fare.
At the time, Ritchie was supporting a measure pending at the Ways and Means Committee that would repeal the occupational tax on wagering. (The measure did not pass. A measure to reduce that tax from $500 to $50 is now being considered.)
"I do recall it being in the summer because I don't like sending people to Tahoe in the winter unless they're skiers," Ritchie said. The trip, he said, was designed to show Healey that casinos are "not something out of a George Raft movie where black-shirted individuals speak in 'dese and dose and dems.' "
Said Healey: "I knew the casinos had legislation before the committee and Rostenkowski was on the committee . . . . I'm generally considered to be his senior employe. Everyone knows I'm close to Danny . . . it's a safe assumption that everyone knows my connection with him and hopefully they could make their case better known to him through me. I think that's a very, very justifiable reason for having me or anybody else go out there."
Healey says taking his wife and children on the trip and accepting payment for their air fare, meals and lodging was "a little bit out of the ordinary."
According to Cone of the ethics committee, there are no provisions in House rules regarding whether it is legitimate for outside interests to pay spouse's or children's expenses. However, an advisory opinion encourages accepting payments to take along the family, saying that "as a matter of policy" the "incentive for members and staffers to participate in meaningful programs will be diminished" if such payments are not allowed.
Healey said he neither gambled nor went to cabaret shows. It was, Healey said, strictly business, an examination of "the inner workings" of the casino.
"I spent mornings with executives of Harrah's and other casinos. They explained to me how their operation worked. I was taken behind the scenes. I was taken to the so-called catwalk and was asked to examine the security areas. I saw the different money counting rooms. I did that for one or two days, morning and afternoon and basically had dinner with various executives of the casinos on those evenings."
Healey was a "complimentary guest" of Phil Satre, Harrah's vice president. "I know he worked because I was up there. I know he stayed up late with me one night watching the operation . . . . I would guess it was a mixture of business and pleasure," Satre said.
At the time, Healey was assistant to Rostenkowski, who was then the House Democrats' chief deputy whip. He was not required to report the trip to the U.S. government and did not. Ritchie did not report the trip as a lobbying activity because, he said, he did not pay for it, Harrah's did. Harrah's did not report the expenditure as a lobbying activity because, Satre said, it was an "educational" trip not geared toward specific legislation.
Said Healey of his relationship with Ritchie:
"He calls me on the phone. He drops into my office and says 'Tell me how our legislation is moving,' and I say,'I don't know, Jim, let me make a call and see where the bill is,' that kind of thing. That is the relationship I have, by the way, I would say with about 200 other people in town."
On Memorial day weekend, 1981, Healey and three other staff workers of Ways and Means Committee members--James Rock, legislative aide to Rep. Kent R. Hance (D-Tex.); John Winburn, then-administrative assistant to Rep. Ken Holland (D-S.C.), and Michael Miller, legislative assistant to Rep. Richard T. Schulze (R-Pa.)--spent three days at the Las Vegas Hilton for a tax seminar.
"I didn't particularly enjoy that weekend in Las Vegas," recalls Healey. "Whether you believe this or not--and I couldn't care less to be honest with you--besides going to meetings out there . . . the extent of my wild social activities was in my room reading and laying along side of the pool until it was time to get out. I don't like Las Vegas . . . but I went because I was asked to go."
Healey was asked to go by Ritchie, who arranged the trip to Lake Tahoe the year before.
With the exception of a dinner the night of arrival, the latest event scheduled during the three-day seminar was a 12:30 luncheon. There were no events scheduled for Sunday.
Ritchie also has arranged a variety of trips for members of the Ways and Means Committee: in 1979, Rep. Holland and his wife went to Harrah's in Lake Tahoe to examine the resort's operations as a guest of the resort; in 1980, Rep. Martin Russo (D-Ill.) and his wife were guests of the Las Vegas Frontier Hotel where he received $1,000 for a speech.
John Salmon is chief counsel for the House Ways and Means Committee and a self-described "Georgetown basketball nut." His counterpart with the Senate Finance Committee is Robert Lighthizer, a member of Georgetown's "Hoop Club." Both were graduated from Georgetown.
Just who selected March 5 as the date to go to Hartford, neither Salmon nor Lighthizer can recall. They do remember that on March 5 they spoke to insurance executives for two hours in the board room of Aetna Life and Casualty, and they saw Georgetown win over St. John's 57 to 42 in the Big East Conference Tournament. The air fare, hotel and meals were paid for by the insurance industry. Salmon and Lighthizer paid for their own basketball tickets.
"I said, 'That's a day I'd like to be in Hartford anyway,' " Salmon recalls telling his neighbor, Robert Giaimo, who arranged the trip. Giaimo, a former Democratic congressmen, now is a lobbyist representing the Insurance Association of Connecticut.
"I was anxious to get them Salmon and Lighthizer up there to brief our people on matters of great interest like 'Modco,' " said Giaimo. "Modco" or "modified coinsurance" is the subject of one of the president's proposed new revenue measures that would bring in an estimated $13.2 billion over the next six years.
John Day, president of the Insurance Association of Connecticut, said he understood that Salmon and Lighthizer were going to be in Hartford for the basketball game anyway. Lighthizer said he purchased tickets for the game in January. Both staffers said they had considered attending the game before the insurance association invited them.
They said the main purpose of the trip was to address the insurance executives, not to see the basketball game. "It was a business trip that had an enjoyable basketball game," Lighthizer said.
The idea for the New Orleans trip took shape over lunch on Dec. 1. R. Duffy Wall, vice president and lobbyist for Freeport-McMoRan, was talking with Ways and Means Committee senior staffers Leonard, Healey and Salmon.
Wall invited them to the Gulf of Mexico as guests of his company to observe their offshore mining operations. There also was talk of the scheduled NCAA basketball tournament to be held in New Orleans' Superdome. The staffers, he recalls, expressed some interest, but the matter was left undecided.
In the following months, the Georgetown basketball team's record brought them closer to the NCAA semifinals in New Orleans. Wall says he does not recall whether Salmon or Healey set the date for the New Orleans trip.
On Feb. 17, Freeport reserved $125-a-night rooms at the Marie Antoinette, a luxury hotel in the French Quarter. The trip was March 25, 26 and 27, the day of the NCAA semifinals. Except for brunch and dinner, the itinerary for March 27 was "Open (NCAA Basketball Semifinals optional)."
Salmon withdrew from the trip because of an illness in the family and schedule conflicts. (He went on Monday for the finals at his own expense.) Healey and Leonard went. Healey said Rostenkowski approved the trip. He said " 'See you later,' " Healey recalled.
Said Rostenkowski: "I felt that it was worthwhile for my staff to go down and see just what the technicians would be telling us and whether or not we can raise some penetrating questions in any discussions that we'd have with people we'd be affecting with legislation."
Rostenkowski said he was aware the NCAA basketball semifinals were to be played that weekend. "I don't think I'd be a Washingtonian if I said I didn't recognize that Georgetown was playing basketball."
In addition to Wall, Healey and Leonard, the Freeport jet carried:
William Murphey, a close friend of both Wall and Healey. Murphey is a registered lobbyist and vice president for federal affairs with American Natural Resources, a company with coal and natural gas interests.
James Ritchie, the Nevada casino and off-track betting lobbyist. Nine days before the New Orleans trip Ritchie's clients testified before a Ways and Means subcommittee on behalf of legislation that would repeal withholding tax on certain gambling winnings.
Wall sat at the front of the plane. "They talked basketball, but not to me. I don't understand it," Wall said. "My attitude was, as long as you go out and let me explain my thing, if you want to watch the game, fine, I could care less."
When the plane touched down in New Orleans the group was taken by limousine to the Marie Antoinette. That first night, Ritchie paid for dinner for Healey and Leonard.
"The basketball coaches were there and we talked about 'could Georgetown beat X' . . . just chatter," Ritchie recalled.
The next morning at 9, Healey and Leonard were flown to Freeport's Grand Isle Sulphur Mine for a tour, and later to a Shell offshore drilling platform for another tour and lunch. By 4 p.m. the tour was over.
That evening, it was dinner for nine at Antoine's, one of New Orleans' most expensive restaurants. In addition to Leonard and Healey, there was Ritchie, Wall, and Freeport and Shell Oil executives.
The conversation, Healey said, was "general sorts of, 'How'd you like the day?' The person from Shell in particular said, 'What did you think of the presentation?' . . . again there was talk of basketball. I had a Georgetown basketball button on as I remember. They said, 'So you're a Georgetown basketball fan?' I said, 'You bet.' That kind of thing--a very light and airy kind of a meal."
The group had oysters Rockefeller, tournedos, salads, souffled potatoes, creamed spinach, and baked Alaskas. The bill for the nine diners came to $624.62. Of that, $184.50 was the bar tab, all billed to Freeport Sulphur.
At 11 a.m. Saturday--the morning before the game--Leonard, Healey and Wall had brunch at Brennan's, where the reservation was marked "V.I.P. It." The meal was billed to Freeport-McMoRan Inc.
"It was an extremely general conversation. What else would you talk about over brunch when you're having a Bloody Mary and going to a basketball game from there?" Healey said.
After breakfast the three were driven by limousine to the Hyatt Regency near the Superdome. There they met Murphey, Rep. Beryl Anthony Jr. (D-Ark.), a member of the Ways and Means Committee, and his wife, Sheila.
"He Anthony is a personal friend of mine for six or seven or eight years and also I wanted to expose him to the offshore mineral industry," Wall said.
The day before, Anthony had filed his declaration to run for reelection in his district. His bill at the Hyatt for Saturday night was charged to William Murphey. Murphey and Anthony said there was an agreement that Anthony would pay him back.
From the Hyatt, the group went to the Superdome for the Georgetown-North Carolina game. Who paid for the tickets?
"You know, that's a good question," Anthony said. "I truthfully couldn't tell you. Sounds stupid, doesn't it?" Wall said he provided the $36 tickets to the governor's box where a party was thrown.
After the game, Leonard, Healey, Anthony and his wife, Murphey and two friends of his dined at Broussards, courtesy of Murphey and American Natural Resources.
The next morning the group was driven by limousine to the airport and flown back to Washington aboard the Freeport jet.
Wall said it was a general educational trip unrelated to any pending legislation.
In a quarterly report filed with the House, Wall noted he was lobbying "for administration's proposed changes in corporate minimum tax." The specific measures Wall supported were minimum taxes related to mining and oil exploration costs. The proposed change would provide a carryover provision enabling companies to offset the tax against income in future years.
The carryover provision could reduce Freeport-McMoRan's tax liabilities by millions of dollars, according to the company's own projections, Wall said. That proposal still is pending.