Russian food importer Soyuzkontrakt of St. Petersburg spared no expense when it formed a U.S. subsidiary in 1995.
The spacious Manhattan office of its U.S. company was "one of the nicest I'd ever seen," said one American employee of the now defunct firm. Executives from St. Petersburg frequently arrived for spending sprees, he recalled.
So when officers of the New York company decided they needed help in Washington to get U.S. Department of Agriculture credit guarantees for frozen poultry exports to Russia, they spent freely.
In the fall of 1996, the company paid $70,000 in lobbying fees and expenses to the Washington law firm of Verner, Liipfert; kicked in a $50,000 "soft money" contribution to the Democratic Party; and contributed $10,000 to House Republicans. A related company, set up to pay the credit card bills, gave $2,500 to the Democratic Party in August 1996. "We needed guidance in Washington as to how to bring things to the attention of the entities," said Daniel Schein, who served as an outside adviser.
In January 1997, after a series of meetings with company officials and their lobbyists, the USDA made the firm's poultry exports eligible for credit guarantees.
But while Soyuzkontrakt's exports of beef livers and frankfurters to Russia did receive a modest $37 million of credits, the USDA never made poultry products part of the program. Officials said producers opposed the assistance because commercial chicken exports to Russia were thriving without the aid.
Nonetheless, Soyuzkontrakt's foray signaled Russian awareness of Washington's importance, and of the need for paid guides through its bureaucratic labyrinths.
Schein, a business executive who has worked in Democratic politics in California and New York, said he was hired in 1995. In the fall of 1996, Schein said, he called an old Democratic friend, Lloyd Hand, a senior partner in Verner, Liipfert, for help with the credit problem.
For one meeting with Schein and Soyuzkontrakt officials, Hand brought in former Texas senator and treasury secretary Lloyd Bentsen.
Schein said he could not recall who suggested making the soft-money donations to the Democrats and Republicans. As a result of the $50,000 contribution to the Democrats, Schein said, he attended a star-studded event at the Hudson River estate of Sen. Jay Rockefeller (D-W.Va.) and spoke briefly to President Clinton. He said he did not discuss Soyuzkontrakt's credit problems.