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Excerpts from TOBACCO MONEY STILL FILTERS INTO CAMPAIGNS;
AS POLITICIANS SWEAR OFF INDUSTRY, DONATIONS STREAM IN THROUGH STEALTHY CHANNELS

by Ruth Marcus and Ceci Connolly, Washington Post [05/08/98]

Since Jennifer Dunn first ran for Congress in 1992, she has had a loyal friend in Philip Morris. The tobacco giant's political action committee supported the Washington state Republican's maiden campaign and has been there for her ever since.

This election cycle, Dunn decided not to take any tobacco money, saying it created "too much trouble." But that didn't mean she had to go cold turkey.

Philip Morris Cos. subsidiary Kraft General Foods Inc. -- which had never before given a penny to Dunn -- stepped in to fill the money vacuum. So far, Kraft has contributed $ 3,000 from its PAC, which is funded entirely by the Philip Morris PAC. As Congress debates a comprehensive anti-smoking measure this spring, the nervous tobacco industry is pouring record sums into the political process. But with smoking becoming an increasingly incendiary issue this election year, a growing number of candidates on both sides of the aisle are saying no to money from Big Tobacco.

"Tobacco money became a big question," said Dunn, who has risen to Republican Conference vice chair, the highest leadership post held by a Republican woman in the House. "I didn't want to spend time explaining why I take it."

GOP fund-raising consultant Tom Hammond estimates that half his congressional clients this year have decided to reject tobacco contributions, fearing that taking the money gives opponents an easy target.

Yet as Dunn's experience illustrates, the profits of cigarette makers or their related businesses are finding their way into campaign coffers in more subtle and hard-to-trace ways -- often at the politicians' requests.

One tobacco executive said candidates have started asking companies to be stealthier about their giving, directing checks to state parties or the House and Senate campaign committees -- organizations that deprive the politicians of direct control over the funds, but that can work to their benefit while providing deniability.

Some candidates vow not to take tobacco money, but then accept checks from the political action committees of tobacco subsidiaries -- even though almost all that money comes directly from the tobacco parent's PAC. Others swear off tobacco money but solicit it for their state parties or pet projects. And some who refuse contributions supplied by company executives through a tobacco PAC nevertheless accept private checks from the very same individuals.

The list of those who have decided recently to reject industry contributions spans the political spectrum and stretches from coast to coast, with the logical exception of tobacco-growing states, where taking the money carries no stigma. The two highest-ranking congressional Democrats, Senate Minority Leader Thomas A. Daschle (S.D.) and House Minority Leader Richard A. Gephardt (Mo.), both swore off tobacco money in the mid-1990s.

Even Republicans, who in recent years have been the primary beneficiaries of tobacco's largess, are kicking the tobacco habit. The list includes newcomers such as Sens. Sam Brownback (Kan.) and Gordon Smith (Ore.) and those facing tough campaigns this fall such as Sen. Christopher S. "Kit" Bond (Mo.) and Reps. J.D. Hayworth (Ariz.) and Rick A. White (Wash.).

"You don't really want to be associated with an industry that consistently lied to Congress and the American people," said Rep. Deborah Pryce (R-Ohio), who stopped accepting tobacco contributions after being tapped to oversee anti-smoking legislation in the House.

Yet when Pryce and Dunn were hosts to 700 people for the Republican Women's Leadership Forum here last week, they relied on tobacco to help foot the bill. Kraft donated $ 25,000, UST Inc. -- which owns the U.S. Tobacco Co. -- gave $ 5,000 and its subsidiary Chateau Ste. Michele, a Washington state winery, donated $ 5,000 worth of wine.

Federal Election Commission records show that Philip Morris transfers far more money into the Kraft and Miller PACs than it receives from executives of those two subsidiaries. Last year, for example, the Philip Morris PAC received a little more than $ 13,000 from Kraft executives but sent $ 37,000 to Kraft, which then doled it out to politicians. Miller executives gave a little more than $ 8,000 to the Philip Morris PAC, but nearly $ 15,000 was transferred to the Miller PAC.

Democrat Daschle offers another case study in creative financing. His political director, Michael Meehan, said the senator has "taken the extra step" of giving up tobacco money because the issue has become "so controversial and so highly charged."

However, Daschle hosted a fund-raising breakfast for a dozen lobbyists here last May that included three from the tobacco industry -- Tommy Payne of R.J. Reynolds Tobacco Co. and David Nicoli and James Molloy of Philip Morris -- who wrote personal checks totaling $ 2,000. Daschle collected another $ 2,000 in tobacco money later in the year from executives at Philip Morris and UST.

In addition, UST's PAC contributed $ 2,500 and Miller Brewing contributed $ 5,000 to a Daschle-arranged event that benefited both the senator's reelection campaign and the South Dakota state party; Meehan said the money from both companies went to the state party, which also received $ 5,000 directly from the RJR Nabisco PAC and another $ 2,500 from the UST PAC. "The South Dakota Democratic party has no policy that prohibits these legal contributions," Meehan said.

Daschle and Dunn are hardly alone. In addition to taking from Kraft and Miller, lawmakers who shun tobacco money accept contributions from Stimson Lane, a wine-making subsidiary of UST whose PAC money comes entirely from the parent company's PAC, and Nabisco Brands Inc., which keeps its finances separate from its parent company, RJR Nabisco Inc.

Under federal election law, companies can't give directly to federal candidates, only to political parties. But they earn points with candidates through their employee-funded PACs, which can give a total of $ 5,000 per election.

"There's a game you can play," said Democratic fund-raising consultant Tom Erickson. "People want to know if they can take Kraft Foods or Miller and we have to tell them at the beginning that it is from the same actual PAC."

Last August, Rep. George R. Nethercutt (R-Wash.) returned a $ 500 donation sent by Philip Morris's PAC. "My Dad died of lung cancer in 1977. I have a bias against smoking," he said recently. "I don't want to encourage the industry."

FEC records show that the Kraft PAC wrote a fresh $ 500 check to Nethercutt the same day the Philip Morris check was returned.

Sen. John McCain (R-Ariz.), primary author of a $ 516 billion anti-smoking bill, has not taken tobacco money since 1992 but accepted a $ 1,000 Miller contribution last June. "This one obviously slipped through the cracks," said McCain's press secretary, Nancy Ives. She said McCain would send the check back because "it's just another way of getting money from tobacco companies."

In an illustration of the pervasiveness of tobacco money, however, McCain is scheduled to appear at a $ 500-a-head fund-raiser sponsored by lawyers at the lobbying firm Patton Boggs -- including two, Thomas Hale Boggs Jr. and Darryl D. Nirenberg, who represent the Smokeless Tobacco Council.

Screening out money from lobbyists whose clients include tobacco "sets a standard no one in this town could meet," said Ives.

THROUGH THE SIDE DOOR

Some of the lawmakers who refused donations from tobacco firms but took money from their subsidiaries this cycle:

Senate

Gordon Smith (R-Ore.)

House

Joe Barton (R-Tex.)

Marion Berry (D-Ark.)

Philip M. Crane (R-Ill.)

Michael D. Crapo (R-Idaho)

Jennifer Dunn (R-Wash.)

Jo Ann Emerson (R-Mo.)

Kay Granger (R-Tex.)

Gil Gutknecht (R-Minn.) Henry J. Hyde (R-Ill.)

Donald Manzullo (R-Ill.)

George R. Nethercutt (R-Wash.)

Joe Skeen (R-N.M.)

Deborah Ann Stabenow (D-Mich.)

Rick A. White (R-Wash.)

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