Six months ago John Gartland, Washington lobbyist for Amway Corp., came to his friend Mike McManus, who schedules trips for President Reagan, with an idea.
He wanted the president to address a rally sponsored by Amway, the hustling organization that sells its own soap, bug spray, costume jewelry and visions of success across America.
The rally, as Gartland portrayed it, would be a forum where Reagan and Amway, which has built a billion-dollar business based on neighbors selling to friends and relatives, could do homage to an ideal that both embrace.
"We're celebrating free enterprise," said the lobbyist, who worked with McManus in the Nixon White House.
Some Reagan aides acknowledged that they were queasy. On the one hand, Amway's top executives, Jay Van Andel and Richard DeVos, were the top spenders in behalf of Ronald Reagan's candidacy in 1980. DeVos, former finance chairman of the Republican National Committee, gave $70,575 in independent expenditures; Van Andel, former chairman of the U.S. Chamber of Commerce, chipped in $68,433.
On the other hand, the White House was not eager for Reagan to embrace a company that in November pleaded guilty to criminal fraud in Canada for failing to pay import duties on home-cleaning products shipped to distributors there.
Amway and its Canadian affiliate, Amway of Canada Ltd., were fined $20 million, the highest criminal penalty ever assessed in Canada. A civil suit by the Canadian government is pending against Amway to recover $118 million in allegedly unpaid duties and penalties.
But last week, the White House and Amway solved the problem. The rally is not an "Amway event," they said.
On Thursday, the day after his State of the Union address, Reagan will indeed travel to Atlanta to address a "Spirit of America-Salute to Free Enterprise" rally. It will be the president's first trip financed by the Reagan/Bush campaign, and will cost $50,000, according to campaign sources.
Amway has lowered its profile slightly. Drawing in part on Van Andel's Chamber of Commerce connections, it recruited the U.S. and Atlanta chambers to co-host the rally, with no financial obligations, along with Citizens' Choice, a chamber lobbying group Van Andel helped to found. It also invited Mayor Andrew Young and lined up guests including Atlanta business leaders, at least one Georgia Democrat, high school marching bands, and a beauty queen who will sing the national anthem.
But Amway distributors are handing out about 7,000 tickets to the rally, and Amway will pick up the tab, including $10,000 for the auditorium alone, according to a spokesman for the Atlanta chamber. Van Andel and DeVos will be on the podium with Reagan, and an Amway spokesman said the firm will film its two leaders alongside the president for a $37 videotape to be sold to Amway distributors to motivate them to increase sales.
Although the chamber insisted on a nonpartisan rally because its rules bar presidential endorsements, the Reagan campaign also appears likely to benefit. White House aides said that Reagan wanted to spend the day after his State of the Union speech with supportive crowds far from Washington. By the time the television lights are switched on in Atlanta, the crowd at the Omni International coliseum should top 14,000, a chamber official said, and the Southern Democratic city appears likely to warm to Reagan.
"We see it as an opportunity to do a little lobbying with the president" for federal assistance to Atlanta, said Len Pagano, communications director of the Atlanta chamber. "We're indebted to Amway for suggesting this vehicle and for picking up the tab, but the program is not in any way an Amway program."
Some Atlanta business leaders expressed concern to the White House because of Amway's legal problems, but Pagano said McManus assured the chamber that "there was no stain on Amway's corporate integrity." McManus said in an interview that White House aides believe Amway "made an error, a mistake, and paid a fine. The Canadian government considers it a settled matter. It was a mistake based on an error in legal advice."
In accepting Amway's guilty plea, Chief Justice Gregory Evans of the Supreme Court of Ontario called the firm's actions "a premeditated and deliberate course of conduct and action undertaken . . . with the knowledge that it would provide enormous profits and business advantages over a long period of years."
Amway has never run from attacks. The first page of an annual report said: "Amway has been challenged by the United States government through the Federal Trade Commission. The state of Wisconsin took it to task, and then Revenue Canada," the Canadian government's tax-collecting agency.
Amway, the second-largest direct-sales company in the United States (Avon is first), has also come under Internal Revenue Service scrutiny: an IRS survey claimed that hundreds of people used Amway distributorships as illegal tax shelters. The IRS cited violations including an Amway salesperson writing off the price of a dog as a "security device" and others taking business deductions for trips to visit their children who were also distributors.
And the Federal Communications Commission is reviewing Amway's "character" qualifications to hold a radio station license in Chicago after a listener complained about the company's guilty plea in Canada.
Amway "has been placed under the microscope of the media to be vilified, envied and ultimately praised," the annual report said. "Through all the years of commotion, Amway has countered its opposition with decisive action, preserved its dignity, and continued simply to mind its business."
When the Detroit Free Press published a series of articles detailing Amway's underpayment of Canadian import duties, the company announced that it would file a $500 million libel suit. The suit was not filed, however.
After pleading guilty to the Canadian indictment of the company, which contained the same allegations as the newspaper series, DeVos and Van Andel ran full-page ads in major American newspapers calling the plea a business decision made to avoid "frictions and tensions" of prolonged litigation. The ads said the firm's violation of Canadian law was inadvertent, based on bad in-house legal advice over a 15-year period.
Responding to similar remarks from Amway's lawyers at the time of the company's guilty plea, the Ontario chief justice said the under- payments resulted from an elaborate system of "fictitious invoices and dummy price lists," and said it was unlikely that "two very sophisticated and very successful businessmen . . . would be susceptible to believing" the system was legal.
DeVos and Van Andel built Amway in the last 25 years from a small circle of distributors selling no-rinse car wash. Now it is a $1.13 billion conglomerate whose holdings include the Mutual Broadcasting System Inc., Peter Island in the British Virgin Islands and a network of 1 million mom-and-pop distributorships selling 350 products in 40 countries and territories. Many of their followers call the salesmen's rise the realization of the American dream. The Amway motto is: "You can do it too."
DeVos and Van Andel became prominent in Washington after the congressman from their home district, Gerald R. Ford, became president and they acquired ready access to the White House. They are regulars at Reagan White House functions. DeVos attended a party for Pakistani President Mohammed Zia ul-Haq while Canada was initiating extradition proceedings against him and Van Andel in the customs case.
Both are close to Rep. Guy Vander Jagt (R-Mich.), chairman of the Republican congressional campaign committee. DeVos and his son, Dick, are co-chairmen of the committee's financial arm.
The Amway founders have developed a talent for mixing political access with financial muscle and emerging with more of each, according to several of their critics.
In 1981, they were among the guests at a Grand Rapids, Mich., gala for the opening of the $7.1 million Gerald R. Ford Museum, to which they contributed $200,000. Other guests included the Reagans, Canadian Prime Minister Pierre Trudeau, Bob Hope, who does commercials for Amway, then-Secretary of State Alexander M. Haig Jr., former secretary of state Henry A. Kissinger, former French president Valery Giscard d'Estaing and then-Mexican President Jose Lopez Portillo.
DeVos and Van Andel shared a dinner table with Haig. Last month, they hired him as a consultant for Amway's international ventures, reportedly to prevent foreign snarls like those with Canadian customs officials.
In 1975, when Amway came under a Federal Trade Commission investigation as an alleged pyramid scheme--a charge that was later dropped--and for making misleading promises of riches to prospective distributors, Van Andel and DeVos had a 43-minute Oval Office visit with Ford.
A month later, Van Andel was quoted in a Michigan newspaper as saying that Ford was aware of Amway's troubles with the FTC. Later, Warren Rustand, director of Ford's scheduling office, and William Nicholson, his assistant, were listed as stockholders in a Nebraska insurance company being formed by Van Andel and DeVos. Rustand and Nicholson dropped out of the venture, despite White House approval of their participation. Nicholson was later hired in Amway's government affairs office.
The FTC ruled in 1979 that Amway's recruiting strategy had "the capacity to deceive" prospective distributors by implying that they would make large sums, and the firm agreed to change its ads to show how much typical distributors earn. After a similar agreement was reached with the Wisconsin attorney general last year, Amway listed the average gross monthly income of distributors as $67.
Since Ford's defeat in 1976, Van Andel and DeVos have moved into conservative business and political fund-raising activities. Listed in 1979 on Fortune's list of the four richest Americans, estimated to be worth between $300 million and $500 million apiece, each contributes at least $10,000 annually to the Republican National Committee, earning the title of "Eagle."
DeVos was named finance chairman of the committee in 1981 but was removed in 1982 by general chairman Richard Richards after referring to the recession as "a cleansing process" and saying he never saw an unemployed person who wanted to work. Some Republican activists complained that DeVos tried to run the committee's financial operation like Amway, with motivational meetings and evangelistic fervor.
"He'd have $10,000 Eagles on stage and he'd ask them: 'Why are you proud to be an American?' " a longtime Republican activist said. "We were losing contributions and that was the last straw."
DeVos said later he was fired "for not kowtowing to the bigwigs enough." Some top Republican operatives said DeVos and Van Andel are generally spurned in party circles and have few friends in the White House. But the Reagan campaign views the Amway people as valuable because they "are good salesmen," said a campaign source. "They go door-to-door for a living and they'll go door-to-door for Ronald Reagan."
DeVos and Van Andel were unavailable for interviews because they were in Hawaii meeting with some of Amway's most successful distributors, according to Amway spokesman Casey Wondergem.
The two remain optimistic, Wondergem said. DeVos traveled to Canada earlier this month to fire up distributors there, and returned bullish, despite a drop in Canadian revenues from about $87 million in 1982 to $80 million in 1983, Wondergem added.
Amway's worldwide corporate revenues also dropped last year, from $1.2 billion in 1982 to $1.13 billion in 1983, the first dip since the company started keeping such records in 1974.
Wondergem said the company blames this largely on the recession rather than on fallout from legal proceedings.
As a sign of Amway's enduring lure to people around the world, Wondergem recalled, DeVos, visiting distributors in France, once was startled to meet an Amway salesman who professed to be a communist.
"How could you be in Amway?" DeVos asked the man, pointing out that Amway "puts the emphasis on the individual and your philosophy puts it on the state."
The Frenchman answered: "It's easy. I need the money."