Abramoff Scandal Turns a Spotlight on the Charitable Foundation Dodge

Bill Frist and Tom DeLay are the Beltway incarnations ofand, the Adelphia and Tyco CEOs who used their companies as their personal piggy banks -- and have been sentenced to serious jail time because of it.
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Like a bad meal endlessly repeating, the gaseous belch of the Abramoff scandal keeps offering up odiferous reminders of the sorry state of our politics.

It's now clear that this is the political equivalent of the corporate corruption I wrote about in Pigs at the Trough. Bill Frist and Tom DeLay are the Beltway incarnations of John Rigas and Dennis Kozlowski, the Adelphia and Tyco CEOs who used their companies as their personal piggy banks -- and have been sentenced to serious jail time because of it. I see the same self-dealing, the same hubris, the same mentality that says, I can do anything I want, say anything I want, give money and high-paying jobs to anyone I want.

Of course, politicians like Frist and DeLay should pay an even higher price than the corporate Capones since they are betraying something even more sacred than shareholders: the public trust.

The latest, from today's Washington Post, is that prosecutors have issued subpoenas seeking documents relating to money from the National Republican Congressional Committee funneled through the U.S. Family Network, a nonprofit group with close ties to Abramoff and Tom DeLay, and used to fund attack ads against Democrats (check out Robert Scheer for a full take down of the group).

The widening Abramoff affair has put the spotlight back on the dominant role Big Money continues to play in our politics -- and of how politicians and their lobbyist pals keep coming up with new and nefarious ways of selling access and influence to the highest bidder.

One of the sleaziest of these is the charitable-foundation dodge. This shockingly legal scam allows those looking to game the system a number of ways to do so. First and foremost, when politicians align themselves with charities, it allows special interests to donate unlimited sums of money and curry favor while acting as if they are doing it out of the goodness of their souls instead of the usual oily self-interest. What's more, because they are giving to "charity," these non-political (wink, wink) donations are tax-deductible. And, thanks to these charities' 501 (c)(3) status, donations to them do not have to be reported -- allowing the influence-buyers to remain in the shadows. It's a win-win-win for shady politicians, lobbyists, and their big-buck backers -- and a lose-lose-lose for our democracy.

Second, these charitable foundations are often used as a full-employment program for the friends, families, and significant others of the politicians and lobbyists connected to them. For instance, DeLay's wife, Christine, pocketed $115,000 from a firm run by the lobbyist who set up the aforementioned U.S. Family Network (a group that never had more than one full-time staff member). A lobbyist who also just happened to be DeLay's former chief of staff. And what did Mrs. DeLay do to earn those six figures? According to DeLay's lawyers, she made lists of the favorite charities of members of Congress. Christine DeLay and Delay's daughter, Dani DeLay Ferro, have also been paid more than half a million dollars by Tom DeLay's assortment of PACs and campaign committees -- but that's a rant for another blog post.

Third, charitable foundations allow politicians to play both sides of the favor-currying street, taking money from corporate interests looking to curry favor then turning around and using that money to curry favor with groups and organizations that might prove helpful down the line. For a prime example of how this works, look no further than Bill Frist's World of Hope charity which took in millions from corporations like 3M and Eli Lilly that have frequent business before the Senate, then doled out heaping helpings of that corporate cash to evangelical Christian groups such as Franklin Graham's Samaritan Purse and the Rev. Luis Cortes' Esperanza USA. Groups that could prove very helpful should one think about -- oh, I don't know -- mounting a run for president.

This Kos post neatly lays out how Frist's World of Hope hits the charitable-foundation-dodge trifecta: taking in corporate cash, and then doling it out to friends and cronies, and to those whose support he is looking to gain.

One of the worst aspects of this abuse of charity is the trashing of one of the best things in our culture, the charitable instinct. When people hear that Abramoff's Capital Athletic foundation took in millions but spent less than 1 percent of its revenue on its purported purpose (with the rest funneled to Trader Jack's pet projects, like overseas golfing trips with DeLay), or that a sizable chunk of the $4.4 million World of Hope took in went to Frist's political cronies, it can't help but cast a pall over the whole concept of charitable giving.

So what can we do to change this sickening state of affairs? Well, while lobbying reforms are being offered across the political spectrum -- from Charlie Cray to Newt Gingrich -- here is a very basic and simple reform that should be adopted right away: full and immediate disclosure from all charities connected to politicians. They should be required to disclose -- did I say fully and immediately? -- who is donating to them, how much they are donating, and what the money is actually being spent on.

After all, "full and immediate disclosure" has long been the mantra of those on the right opposed to campaign finance laws. We don't need more laws, they argue, just full and immediate disclosure. The Hammer himself trotted out the phrase in an angry 1998 letter to Roll Call about a column written by Norm Ornstein: "We are for full and immediate disclosure," wrote DeLay of his Free Speech Coalition, touting a bill that "would put voters in the driver's seat, not the government, in deciding whom they want to vote for by requiring the immediate disclosure of campaign contributions on the Internet. This fuller disclosure would help lift the veil of secrecy, obfuscation and misdirection that Ornstein complains about."

Here's a line you won't see very often: I couldn't agree more with Tom DeLay. As we've seen, few people know as much as he does about secrecy, obfuscation, and misdirection. So let's apply what he said about campaign contributions to charitable foundations connected to politicians.

And while charity begins at home, full disclosure should begin in the House and the Senate.

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