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  • A 3rd DeLay Trip Under Scrutiny

    A 3rd DeLay Trip Under Scrutiny
    By R. Jeffrey Smith and James V. Grimaldi, Washington Post Staff Writers

    The Washington Post
    Wednesday, April 6, 2005

    A six-day trip to Moscow in 1997 by then-House Majority Whip Tom DeLay
    (R-Tex.) was underwritten by business interests lobbying in support
    of the Russian government, according to four people with firsthand
    knowledge of the trip arrangements.

    DeLay reported that the trip was sponsored by a Washington-based
    nonprofit organization. But interviews with those involved in planning
    DeLay's trip say the expenses were covered by a mysterious company
    registered in the Bahamas that also paid for an intensive $440,000
    lobbying campaign.

    It is unclear precisely how the money was transferred from the
    Bahamian-registered company to the nonprofit.

    The expense-paid trip by DeLay and four of his staff members cost
    $57,238, according to records filed by his office. During his six
    days in Moscow, he played golf, met with Russian church leaders and
    talked to Prime Minister Viktor Chernomyrdin, a friend of Russian
    oil and gas executives associated with the lobbying effort.

    DeLay also dined with the Russian executives and two Washington-based
    registered lobbyists for the Bahamian-registered company, sources say.
    One of those lobbyists was Jack Abramoff, who is now at the center
    of a federal influence-peddling and corruption probe related to his
    representation of Indian tribes.

    House members bear some responsibility to ensure that the sponsors
    for their travel are not masquerading for registered lobbyists or
    foreign government interests, legal experts say. House ethics rules
    bar the acceptance of travel reimbursement from registered lobbyists
    and foreign agents.

    In this case, travel funds did not come directly from lobbyists;
    the money came from a firm, Chelsea Commercial Enterprises Ltd.,
    that funded the lobbying campaign, according to the sources. Chelsea
    was coordinating the effort with a Russian oil and gas company --
    Naftasib -- that has business ties with Russian security institutions,
    the sources said.

    Aides to DeLay, who is now the House majority leader, said that despite
    the presence during the trip of the two registered lobbyists, DeLay
    thought the nonprofit organization -- the National Center for Public
    Policy Research -- was funding the trip on its own. Suggestions to
    the contrary have come to light in media reports only in the past
    few weeks, an aide said.

    "The trip was initiated by the National Center," spokesman Dan Allen
    said, "and they were the ones who organized it, planned it and paid
    for it." Sources connected to the trip say, however, that Abramoff,
    acting at the behest of his Russian-connected client, Chelsea,
    brought the idea to the center. Questions on Three Trips

    The 1997 Moscow trip is the third foreign trip by DeLay to be
    scrutinized in recent weeks because of new statements by those involved
    that his travel was directly or indirectly financed by registered
    lobbyists or a foreign agent.

    Media attention focused on DeLay's travel last month after The
    Washington Post reported on DeLay's participation in a $70,000
    expense-paid trip to London and Scotland in 2000 that sources said
    was indirectly financed in part by an Indian tribe and a gambling
    services company. A few days earlier, media attention had focused on
    a $106,921 trip DeLay took to South Korea in 2001 that was financed
    by a tax-exempt group created by a lobbyist on behalf of a Korean
    businessman.

    DeLay on March 18 portrayed criticism of his trips and close ties to
    lobbyists as the product of a conspiracy to "destroy the conservative
    movement" by attacking its leaders, such as himself. "This is a huge,
    nationwide, concerted effort to destroy everything we believe in,"
    DeLay told supporters at the Family Research Council, a conservative
    Christian group.

    The three foreign trips at issue share common elements. The sponsor
    of the Moscow trip, the Capitol Hill-based National Center for Public
    Policy Research, also sponsored the later London trip. The center
    is a conservative group that solicits corporate, foundation and
    individual donations.

    Also, Abramoff not only joined DeLay in Moscow but also helped
    organize DeLay's subsequent London trip. Abramoff also filed expense
    reports indicating he paid for some of DeLay's hotel bill in London,
    according to a copy obtained by The Post.

    Edwin A. Buckham, who was DeLay's chief of staff in 1997 and then
    became a Washington lobbyist for major corporations, participated
    in two of the three trips. In 1997, he visited Moscow twice -- once
    with DeLay -- and on one of these trips he returned via Paris aboard
    a Concorde jet with a ticket he told the Associated Press in 1998
    had been financed by the National Center.

    Buckham also joined DeLay on the Korea trip. Buckham did not respond
    to messages left by The Post.

    Untangling the origin of the Moscow trip's financing is complicated
    by questions about the ownership and origins of Chelsea, the obscure
    Bahamian-registered company that financed the lobbying effort in favor
    of the Russian government that targeted Republicans in Washington
    in 1997 and 1998. Those involved in this effort also prepared and
    coordinated the DeLay visit, individuals with direct knowledge about
    it said.

    In that period, prominent Russian businessmen, as well as the Russian
    government, depended heavily on a flow of billions of dollars
    in annual Western aid and so had good reason to build bridges to
    Congress. House Republicans were becoming increasingly critical of
    U.S. and international lending institutions, such as the Overseas
    Private Investment Corporation (OPIC) and the International Monetary
    Fund, which were then investing heavily in Russia's fragile economy.

    Unlike some House conservatives who scorn such support as "corporate
    welfare," DeLay proved to be a "yes" vote for institutions bolstering
    Russia in this period. For example, DeLay voted for a bill that
    included the replenishment of billions of dollars in IMF funds used
    to bail out the Russian economy in 1998.

    A DeLay aide said he tried to reform these institutions through
    the legislative process. DeLay voted to fund these agencies because
    their financing was usually included in appropriation bills that he
    generally supported, the aide said. They also noted that OPIC had
    the strong backing of the energy industry, including companies from
    Texas that received OPIC financing.

    Meetings in Moscow

    The Russian campaign is detailed in disclosures filed with the House
    by lobbyists. Those records state that Chelsea, with an address listed
    variously as a post office box on the British island of Jersey -- a
    tax haven off the French coast -- or a law firm in the Bahamas, paid at
    least $440,000 to fund lobbying aimed at building "support for policies
    of the Russian government for progressive market reforms and trade
    with the United States," according to lobbying registration documents.

    The Washington offices of two lobbying and law firms collected the
    fees. Preston Gates Ellis and Rouvelas Meeds LLP -- where Abramoff
    then worked -- received $260,000 in 1997 and less than $10,000 in
    1998; Cadwalader Wickersham and Taft LLP was paid $180,000 in 1997
    and less than $10,000 annually for the next three years, according to
    the registrations. Their listed lobbying targets included members of
    the House and Senate and officials of the State Department and the
    Agency for International Development.

    "One of the functions of the lobbying effort was to encourage U.S.
    policymakers to visit Russia and to learn more about Russia," Ellen S.
    Levinson, a lobbyist then working on the Chelsea account at Cadwalader,
    said in an e-mailed response to questions.

    She said Preston Gates used its "contacts with policy institutes and
    congressional offices" to arrange these trips. Preston Gates said in
    a written statement that it does not comment on its work for clients.

    In a Cadwalader memo dated May 6, 1997, and obtained by The Post
    from another source, Levinson depicted the DeLay trip as one of six
    organized that year as part of the lobbying effort. Others included an
    "advance team" that visited Moscow later that month and a visit by
    "think tank" experts in June. A copy of the memo was sent to Abramoff.

    A total of six members of the two lobbying firms participated in
    these trips, according to those involved. Levinson and two Preston
    Gates lobbyists were members of the "advance team."

    During the third visit, Cadwalader lobbyist Julius "Jay" Kaplan joined
    DeLay and Abramoff at a "fancy dinner" in Moscow, according to one
    of those present -- a circumstance first reported last month in an
    article about the trip in National Journal's Congress Daily.

    Breaking with traditional practice for congressmen traveling
    overseas, DeLay did not contact the State Department in advance
    or meet with officials at the U.S. Embassy in Moscow regarding his
    meeting with Chernomyrdin, according to a department spokeswoman who
    said she checked with 10 people at the embassy then or responsible
    for facilitating congressional trips.

    Allen, DeLay's spokesman, said the State Department was not contacted
    because "the National Center was responsible for the arrangements
    on the trip, including setting up the meetings. Beyond that, members
    of Congress aren't required to have the State Department present at
    meetings with leaders from other countries."

    Last month, Amy Ridenour, director of the National Center, posted a
    statement on her organization's Web site in response to questions about
    DeLay's trip to Russia stating that the center itself had "sponsored
    and paid" for all the expenses associated with it. Ridenour and her
    husband also took part in the visit.

    But a person familiar with planning for the trip said Abramoff --
    who has long been close to DeLay -- approached the National Center
    with the idea for the trip on behalf of Kaplan and his client,
    Chelsea. That person said the expenses by the center were in turn
    replenished by "an American trust account affiliated with a law firm"
    that the person declined to name.

    Kaplan declined to be quoted for this article, citing what he called
    "lawyer-client privilege." But another person with direct knowledge
    about the trip arrangements said that it was Chelsea -- which had
    the registered Washington lobbyists in its employ -- that "gave the
    money to NCPPR to pay for the trip."

    This person, who spoke on the condition of anonymity to protect his
    business interests, added: "I didn't see anything wrong there. All
    these foundations get money from somewhere, and they give it
    out." Moreover, the source said, "this was the Russians' way of doing
    business then -- moving money from one firm to another."

    Who Financed Travel?

    The question is: Who stood behind Chelsea, and thus ultimately
    financed the trip? A regular office for the firm could not be located
    by The Post, in Moscow or at its two listed addresses; its Bahamian
    registration ended in 2000, officials there said. Efforts by The Post
    to find the three men -- one Belgian, one British, one Russian --
    named in lobbying registrations as Chelsea investors or owners in
    lobbying disclosures were unsuccessful.

    A spokeswoman for Cadwalader, Paula Zirinsky, said the firm had no
    contact information for anyone from Chelsea, because "persons that
    worked on that matter have not been with the firm since 1997." Jonathan
    Blank, managing partner of the Washington office for Preston Gates,
    similarly said his firm had no current contact information for Chelsea.

    In interviews, however, five individuals with direct knowledge of
    the lobbying effort separately described executives of a diversified
    Russian energy firm known as Naftasib as being intimately involved
    in the lobbying.

    Naftasib, which oversees interests in mining, oil and gas, construction
    and other enterprises from a four-story unmarked building in downtown
    Moscow, says it is a separate company from Chelsea but acknowledges
    seeking to cultivate friends in Washington in 1997.

    In a written statement issued Friday in response to questions from The
    Post, Marina Nevskaya, Naftasib's deputy general manager, explained
    that her firm "wanted to foster better understanding between our
    country and the United States, and felt that if these trips were
    successful they would foster a better overall climate that could
    ultimately benefit Naftasib as well as other Russian enterprises."

    Nevskaya said her company "did not finance in any manner" the DeLay
    trip or the others described in Levinson's memo. But she said Naftasib
    "did host and pay for some dinners for participants in some of
    the trips, organized a few other special events . . . and may have
    provided minor courtesies, such as some auto pickups and dropoffs
    for some visitors during one or more of the trips."

    She also acknowledged providing "advice about trip logistics" before
    they occurred and meeting trip participants. Nevskaya did not offer
    details, but those involved in organizing DeLay's trip said he met
    with Nevskaya and was escorted around Moscow by the general manager
    of Naftasib, Alexander Koulakovsky. DeLay has also met with Nevskaya
    and Koulakovsky in Washington since then, according to several sources
    with direct knowledge of the contact.

    During the June 1997 trip to Moscow by "think tank" experts -- one of
    the scheduled visits listed in Levinson's memo -- several participants
    said they got the impression that Preston Gates was the organizer,
    Naftasib was the ultimate financier and that the trip was a dry run
    for DeLay's visit.

    "It was done through or under the auspices of NCPPR," said Bart Adams,
    a North Carolina journalist who joined the expense-paid trip. But
    he said he recalls hearing that "the money was coming from a Russian
    oil company."

    David Lowe, an official at the National Endowment for Democracy,
    said he was recruited to join the trip by the Preston Gates firm;
    former Senate aide James P. Lucier, who also was on the trip, said
    Naftasib's executives played such a large role that they "seemed
    to be the clients of Preston Gates," a claim the firm denies. "Some
    American investment or tie was the end goal," said a third participant,
    "and the plan was to bring over some congressmen" later.

    A publicist who works for Abramoff attorney Abbe David Lowell said
    Abramoff did lobby for Chelsea but not for Naftasib. The publicist
    said Abramoff thought "bringing a greater understanding of Russia to
    American decision makers was and is good for America."

    The efforts by Naftasib's executives to curry favor among
    Republicans -- including DeLay -- sowed controversy at the time
    among conservatives. A journal published by a Washington think tank,
    the American Foreign Policy Council, claimed within a few days after
    DeLay's trip ended that it was actually "sponsored" by Naftasib. The
    journal -- the Russian Reform Monitor -- also highlighted what it
    characterized as Naftasib's tight connections to the Russian security
    establishment.

    The journal quoted promotional literature for Naftasib that described
    the firm as a major shareholder in Gazprom, the state-controlled oil
    and gas giant. The literature also said Natfasib's largest clients
    were the ministries of defense and internal affairs. The literature
    also states that Nevskaya was an instructor at a school for Russian
    military intelligence officers. She declined to address those claims
    in response to questions from The Post.

    Steve Biegun, who was then a senior Russia expert for the Senate
    Foreign Relations Committee and later served as executive secretary
    to the National Security Council during President Bush's first term,
    said he deliberately blocked a meeting that Nevskaya sought with
    Jesse Helms (R-N.C.), then the committee chairman.

    "They were a client of the lobbying firm Preston Gates," said
    Biegun, who is now a Ford Motor Co. vice president for international
    governmental affairs. "I made some calls . . . and got enough warning
    signs" to ensure that Helms avoided dealing with the firm. Biegun
    said the information he obtained from his sources was "nothing that
    would stand up in court" but he worried that in this period, "a lot
    of unsavory figures from Russia were buying their way into meetings
    and getting their pictures taken, to put on the wall back in Moscow."

    "I just had my doubts, and nobody did anything to allay them," Biegun
    said. "I did not know who either of them really were."

    Asked to comment, Blank, Preston Gates's Washington managing partner,
    said in a written statement: "Chelsea was our only client. Naftasib
    was not our client. We did work with Naftasib representatives when
    their interests coincided with our client's." Blank added that "we are
    confident that the individuals still with the firm who were involved at
    the time acted ethically, appropriately, and in service of the client."

    Abramoff left Preston Gates at the end of 2000.

    Staff writer Susan Schmidt, research editor Lucy Shackelford,
    and researchers Alice Crites and Madonna Lebling contributed to
    this report.

    http://story.news.yahoo.com/news?tmpl=story&u=/washpost/20050406/pl_washpost/a28319_2005apr5
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