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Conflict of Interest: DeLay’s Legal Defense Firm Lobbies for Major Corporate Interests on Capitol Hill

November 1, 2005

Conflict of Interest: DeLay’s Legal Defense Firm Lobbies for Major Corporate Interests on Capitol Hill

Third Quarter Contributions to Legal Defense Fund Show a Gusher from Energy Interests After DeLay Helped Usher Through the Energy Bill

WASHINGTON, D.C. – That former House Majority Leader Tom DeLay’s (R-Texas) legal defense firm also lobbies Congress on many major issues creates a conflict of interest, Public Citizen said today. The organization called for stiffer House rules and for DeLay to select another law firm.

Public Citizen also released an analysis of the latest contributions to DeLay’s legal defense fund, which found he has raised just over $1.4 million in the last five years, and that individuals and companies in the energy industry contributed $89,000 in the past quarter, during the period that Congress approved the energy bill under DeLay’s leadership. This amount represents 41 percent of the total DeLay has raised from energy interests since July 2000.

DeLay has paid his defense firm, Bracewell-Giuliani (formerly Bracewell Patterson), more than $790,000 since 2000 for defending him against ethics charges, including a criminal indictment for money laundering in Texas state elections. According to information DeLay disclosed in his personal financial disclosure form filed in May 2005, he owed the firm between $100,001 and $250,000 at the end of 2004. DeLay’s financial disclosures also indicate that he owed the firm between $50,001 and $100,000 when he filed his 2002 and 2003 reports.

Bracewell-Giuliani is a registered lobbyist with dozens of clients in Washington, D.C., according to lobbying disclosure records maintained by the Secretary of the Senate. Many of the clients Bracewell-Giuliani lobbies on behalf of have major business before DeLay and the U.S. House of Representatives.

“Owing such sums of money to your defense firm while that firm is a major player in the influence- peddling business in Washington is unseemly and a conflict of interest,” said Joan Claybrook, president of Public Citizen. “To avoid any appearance of corruption, DeLay should get new legal representation.”

Preventing such conflicts of interest is the very purpose of House Rule 25, which prohibits lobbyists from making contributions or loans to an officeholder’s legal defense fund. When a congressman goes substantially into debt to a law firm that is also a lobbyist, there is precisely the same conflict: A lobbyist is financing the officeholder’s legal defense.

DeLay’s cozy relationship with energy lobbyists formed the grounds for his third rebuke from the House ethics committee in October 2004. He had set up a golf outing at The Homestead resort with energy lobbyists who also had business pending before the House, which the ethics committee considered unseemly and which it determined reflected poorly on the House.

Bracewell-Giuliani has lobbied Congress on behalf of several clients that have received favorable treatment from DeLay while the firm also served as DeLay’s defense lawyer. The close nexus between the special interests and legislation sought by a lobbying firm, and the potential for a lobbying firm currying favor with that politician as his legal representative raises an inappropriate appearance of insider influence peddling by the lobbying firm.

Bracewell-Giuliani represents a gamut of energy industry giants with high stakes before Congress. Energy interests that the firm has represented since 2000 include Southern Co., Shell Oil, the Gas Processors Association and the Electric Reliability Coordinating Council, according to lobbying disclosure filings. The Council, in turn, is a large coalition of utilities such as FirstEnergy that lobby for pro-industry policies. Bracewell also employs two leading energy-industry spokespeople, Frank Maisano and Scott Segal.

The lobbying firm also has represented the Oxygenated Fuels Association, which is a coalition of manufacturers of methyl tertiary-butyl ether (MTBE), a fuel additive that is a likely carcinogen and is a known groundwater pollutant. Its manufacturers have lobbied Congress for years for immunity from lawsuits seeking payment for the clean-up of MTBE-contaminated water supplies.

Bracewell-Giuliani received $254,000 from the Oxygenated Fuels Association in 2003 – during which DeLay served as House majority leader – to lobby Congress and federal agencies on “legislation regarding status of MTBE and related issues,” according to lobbying disclosure records. DeLay fought hard for the MTBE manufacturers that year. In November 2003, the energy bill was stalled due to a discrepancy between the House version, which included immunity for MTBE manufacturers, and the Senate version, which did not. President Bush called DeLay and asked him to compromise on the MTBE provision. DeLay, ever faithful to the wishes of the MTBE manufacturers, refused.

“Energy interests got a gusher in the energy bill, and now it appears that they want to keep their best friend in Congress,” said Frank Clemente, director of Public Citizen’s Congress Watch division. “House rules should be made absolutely clear: Lobbying firms with business before Congress should be prohibited from serving as legal counsel to members under indictment or under an ethical cloud.”

The giving from corporations and members of Congress helped make this quarter the largest on record for DeLay’s legal defense fund. Of note:

  • Members of Congress contributed at least $73,500 this quarter, bringing their total contributions to the fund to $465,500, or 42 percent of the total raised. The leading congressional contributor was Rep. Joe Barton (R-Texas), who donated the maximum $5,000 from his leadership political action committee (PAC) and $5,000 from his campaign account.
  • Energy industry contributions to DeLay in the past quarter included $30,000 from mining and $28,000 from oil and gas companies. Anthony Alexander, CEO of Ohio-based electric utility First Energy, combined with his wife to give $10,000. Alexander was a “Pioneer” in the 2000 and 2004 presidential campaigns of George W. Bush, meaning he collected at least $100,000 in contributions for the candidate.
  • Compressor Engineering Corp. of Texas, Compressor affiliate Ceco Pipeline Services Company Inc. and five members of the company’s founding family combined to give $35,000. These included $5,000 from Compressor Engineering Corp., $5,000 from Ceco Pipeline Services Company Inc., and $5,000 each from five Hotze family members.
  • The fund received $25,000 from individuals and entities associated with Kinetic Concepts Inc. These included $5,000 each from Texan Republican James Leinenger and his wife; $5,000 each from Kinetic Concepts CEO Dennert Ware and his wife; and $5,000 from the Kinetic Concepts Inc. PAC. Kinetic Concepts contributed $142,500 to DeLay’s soft money PAC, Texans for a Republican Majority, in 2002. DeLay is currently under indictment for allegedly laundering money into Texas state elections that was distributed from TRMPAC.

A complete analysis of DeLay’s legal defense fund, background on his previous violations of House Rules and the quarterly filing of the fund, is posted on Public Citizen’s Web site at: http://www.DethroneDeLay.org.