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INSIGHT

Jack Abramoff Scandal

Aired January 3, 2006 - 18:00:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

JONATHAN MANN, CNN HOST: The king of K Street confesses. One of Washington's most notorious lobbyists pleads guilty to fraud, conspiracy and tax evasion. A massive investigation now moves closer to the powerful people he worked with, won over and bribed.
Hello and welcome.

In the end, a man who made his living as a dealmaker made a deal for himself. Jack Abramoff pleaded guilty in federal court Tuesday to a string of charges, the central figure in a slowly unfolding scandal that could eventually consume some of the most important people in Washington.

Abramoff isn't a household name in the United States. He is even less known around the world, but that is changing. Abramoff is revealing the dark side of K Street, the row of office buildings where Washington's lobbying industry is centered. His decision to strike a deal, getting a lesser penalty in return for testimony about what he knows and the people he knows, could shake K Street, Congress and maybe even the White House.

On our program today, big news inside the Beltway.

We begin with CNN's Ed Henry.

(BEGIN VIDEOTAPE)

ED HENRY, CNN CORRESPONDENT (voice-over): Jack Abramoff pled guilty to tax evasion, mail fraud and conspiracy, including allegations he bribed public officials. Then the one-time super lobbyist told the judge, "Words can never express my sorrow and profound regret, nor can they express my sadness and regret for my conduct. I ask for forgiveness and redemption from almighty."

Humble words from a man who defrauded his Indian gaming clients out of tens of millions of dollars.

ALICE FISHER, ASST. U.S. ATTNY. GEN.: Abramoff profited tremendously from the illegal arrangements outlined today, receiving an estimated $25 million in undisclosed kickbacks and other fraudulently obtained funds.

HENRY: The courthouse developments are being watched nervously on Capitol Hill. Abramoff has agreed to cooperate with the probe, which according to a government official is now looking at about two dozen lawmakers and congressional staffers.

The plea deal alleges the lobbyist conspired to "corruptly give, offer and promise things of value, including money, meals, trips and entertainment to public officials and their relatives with the intent to influence and in return for agreements to perform official acts benefiting defendant Abramoff."

Recipients of those gifts include powerful Republicans, like former House Majority Leader Tom DeLay, who has denied wrongdoing; and Bob Ney, of Ohio, who has been subpoenaed by the Grand Jury. Ney is pledging to cooperate with the investigation and is confident he will be cleared, though he's been tight-lipped about the allegations.

REPORTER: Have you been told you're going to be indicted? Did you take bribes?

(END VIDEOTAPE)

MANN: Ed Henry reporting there.

Abramoff spent most of his career staying out of the spotlight, so as we mentioned, neither his exploits nor his undoing have really caught this country's attention. That's too bad, because he's quite a colorful character.

Here's CNN's Candy Crowley.

(BEGIN VIDEOTAPE)

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT (voice-over): Over a decade as a lobbyist, gathering clients and building influence, Jack Abramoff became the consummate dealmaker, a guy who did not push the envelope of ethics and law but blew right threw it.

CHELLIE PINGREE, COMMON CAUSE: It's kind of the worst thing people image from the outside of what can go on inside of Washington. No standards, no ethics, breaking all the rules, and what clearly looks like violations of the law.

CROWLEY: At 47, Abramoff, raised in Beverly Hills, educated at Brandeis and Georgetown Law, is headed for the slammer, but a long, strange trip it's been.

August 1984, the chairman of College Republicans addresses the National Convention.

JACK ABRAMOFF, LOBBYIST: Today our party readies itself to mount the wave of the future. Will we ride that wave to glory or will it send us crashing to shore?

CROWLEY: At 26, Abramoff had made his national political debut. Ten years later Republicans took over Congress. Abramoff joined a lobbying firm and rode the wave. He bought two Washington area restaurants, wining and dining lawmakers and their staffs. He raised $100,000 for the president's reelection campaign. He donated or had clients donate to other political coffers. He leased four skyboxes in various sports arenas for his growing list of golden contacts. He arranged for elaborate golf outings and other trips, all allegedly in the service of clients who were paying Abramoff tens of millions for his access.

PINGREE: Look at the numbers of members of Congress who are already starting to give back contributions, some of whom say they never even met Jack Abramoff, but they don't want to be anywhere near it.

CROWLEY (on camera): You may not have heard of Jack Abramoff, but you have heard of a lot of people who know him. He is at the epicenter of what could be a seismic event in Washington's corridors of power.

Candy Crowley, CNN, Washington.

(END VIDEOTAPE)

MANN: We take a break. When we come back, a closer look at the complicated and extensive lobbying of Jack Abramoff.

Stay with us.

(BEGIN VIDEO CLIP)

FISHER: Abramoff was so bold as to take fees to assist one client when he was actually working for another client to defeat the first client's interest.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

MANN: The great Indian gambling game. Indian tribes in the United States have grown rich since Congress decided to give some of them gambling licenses. To protect those licenses, the tribes wanted powerful friends in Congress, and to get those friends they paid Jack Abramoff.

Welcome back.

A Senate committee found that Abramoff and a partner, who pleaded guilty earlier, split more than $60 million in fees from Indian clients in just three years. But that's not all. According to the government, and we heard it alluded to just a moment ago by one of the prosecutors, part of what he did was lobby lawmakers to withdraw some tribes' licenses. Then he charged tribes to lobby lawmakers to get those licenses restored. That too is part of what Abramoff pleaded guilty to.

Joining us now to talk about all of this is Matthew Continetti, a staff writer at the "Weekly Standard" and author of a forthcoming book about the Republicans called "Can This Party Be Saved: How Money, Power and Influence Have Corrupted the GOP."

Thanks so much for being with us.

Let me ask you how he operated. What exactly did Abramoff do for lawmakers? What did they do for him?

MATTHEW CONTINETTI, "WEEKLY STANDARD": Well, the first answer that comes to mind is actually no one is sure. We do know that he charged a lot of money. Abramoff specialized not only in direct lobbying of lawmakers, and he had many contacts, which was very important, which I think the clients were paying for, clients within the administration, clients in Congress -- rather contacts in Congress -- and also contacts in the broader Republican establishment. So people were paying for access.

They were also paying him for grassroots activity, kind of the meat and potatoes of politics, voting drives and mail campaigns and ways to kind of gin up with they call the grassroots of support.

MANN: Now, that doesn't sound illegal.

CONTINETTI: No, it doesn't. And, in fact, if you talk to a lot of lobbyists, they'll tell you that Jack is just another part of the lobbying machine in Washington, D.C. In fact, they'll say that he just took it a little bit too far. In the case of the Indian tribes, what he pled guilty to today, he would be directing his clients to give money to a third party, Michael Scanlon, who, as you mentioned, had also pled guilty.

And then in a secret arrangement, Scanlon would then kickback 50 percent of the profits of those deals to Abramoff. They called it the "Gimme Five." That's what's illegal.

And what also seems to be illegal is Abramoff asking certain lawmakers to insert remarks into the Congressional Record or to vote on a certain bill or to take language and insert it into a different bill benefiting his clients. That, the Justice Department thinks, could constitute briber.

MANN: I want to take you back to the Indian tribes, because it really seems egregious. We explained it briefly to our audience, but I myself still can't believe that the took money from tribes to lobby against other tribes, to essentially injure their economic interest, and then would seek out money from the injured tribes to restore their gambling license and economic interest. It just seems boldfaced and wrong. Did he speak publicly or do we even have any sense of him speaking privately about his own feelings about this?

CONTINETTI: Well, he thinks that he was just doing his job as an advocate. Abramoff has not given any on-the-record interview certainly since the Senate Indian Affairs Committee began looking into his case, and none since early last year. But he thinks that he was just doing his job.

The most remarkable thing about Abramoff is that no matter what he was doing, whether he was shutting down casinos or whether he turned right around and tried to reopen the casinos that he had just shut down, he always cloaked it in the language of the conservative movement. He was a member of this political movement that 25 years now has kind of reached the apogee of its power.

And so he cloaked these very base financial arrangements in ideological language. And I think that may prove to be the most damaging thing he did to the Republican Party.

MANN: Well, let me ask you about the investigation, per se, rather than the political impact. How does it proceed now? Scanlon has already pleaded guilty. Abramoff has pleaded guilty. Another figure has pleaded guilty. How far will it go? How quickly do you think it will pick up speed?

CONTINETTI: Well, the short answer is that we don't know, and we're not sure whether it will pick up speed. What we're hearing from the criminal division of the Justice Department is that it may take up to a year for them to construct cases against certain lawmakers, including the most prominent among them former Majority Leader DeLay.

It is likely that some form of legal action will be taken against Representative Ney, whom Abramoff paid and Michael Scanlon paid to just insert remarks into the Congressional Record that had nothing to do with.

MANN: Reminding people once again, this is Bob Ney, Republicans of Ohio. Go on.

CONTINETTI: Right, the Republican from Ohio.

The legal action there is likely some time in the coming weeks. But I think this is just the beginning of the Abramoff story rather than the end, as some people in Washington were expecting it to be.

MANN: Why do you say the beginning?

CONTINETTI: Well, because these investigations are going to be ongoing. We don't even know, to give you an example, we don't know exactly how many people are being looked at. We know that there are at least six Congressmen, sitting Congressmen. We know that when you expand the circle to include their former aides, that number gets up to maybe a dozen people. And if you expand the circle even further, to include sitting administration officials, for example, that number gets even higher, as high as 22 people total I believe your reporter mentioned.

So no one is even sure about who they're investigating, so we can't exactly be sure about when everything will come toppling down. I do know, of course, that the Republicans are very nervous about this investigation taking place approaching the midterm elections this fall.

MANN: Let me ask you one quick question. White Water was a legal investigation. Watergate was a legal investigation. Seems like every scandal sooner or later in Washington turns into a legal investigation. In legal terms, how does this compare to scandals like those?

CONTINETTI: I think the closest comparison that can be made is to the Abscam scandal, which is the early 1980s. That was a congressional scandal that resulted in many indictments of sitting lawmakers. And when you talk to officials at the Justice Department or congressional historians, Abscam is the most likely comparison they make.

And I've also heard it said that the Abramoff scandal will turn out to be the Enron of lobbying. These are comparisons that Republicans are probably very nervous about.

MANN: Well, we'll be sending people to Google on Abscam and Enron. Matthew Continetti, the book is "Can This Party Be Saved." Thanks so much for talking with us.

CONTINETTI: Thank you.

MANN: Just ahead, the political fallout for Republicans.

Stay with us for that.

(COMMERCIAL BREAK)

MANN: There are 535 members of the U.S. Congress. Published accounts say that more than 200 of them got money from Abramoff, his associates or their clients. Some lawmakers have started returning campaign contributions, but campaign contributions were only a part of the way Abramoff favored his friends.

Welcome back.

The presumption is that at least a few more big Washington names are going to fall, as we've heard, and maybe more than a few. The impact will inevitably be political.

CNN's Bill Schneider has a look at that.

(BEGIN VIDEOTAPE)

BILL SCHNEIDER, CNN SR. POLITICAL ANALYST: Jack Abramoff's going to sing. But who's going to face the music? There are two schools of thought. One says that when voters hear corruption they don't think Republicans or Democrats. They think politicians. Almost half the public believes most members of Congress are corrupt. About the same as in the fall of 1994, which saw a huge revolt against incumbents.

Right now corruption is not a highly partisan issue. The public does not see Republican members of Congress as significantly more or less corrupt than Democrats. It's really a populist issue. Americans who didn't finish college believe most members of Congress are corrupt. College grads don't think so. They're closer to the establishment and less suspicious of it.

Republicans are counting on the issue to remain nonpartisan. The White House is distancing itself from Abramoff.

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECY.: The wrongdoing that he apparently now is acknowledging he was involved in, is outrageous.

SCHNEIDER: President Bush himself called Abramoff, quote, "an equal money dispenser" to people in both political parties.

ABRAMOFF: I have no choice but to assert my various constitutional privileges against having to testify.

SCHNEIDER: The second school points out that most of Abramoff's money seems to have gone to his fellow Republicans, including one very high profile Republican. And even if voters turn against all incumbents, Republicans have more at stake. Most incumbents in Congress are Republicans.

When asked in October which party in Congress would do a better job dealing with corruption, Democrats held an 11 point advantage, not because people believe Democrats are less corrupt but because people know Democrats are out of power and money follows power.

(on camera): In 1994 Democrats had been in power for 40 years. When voters got disgusted with Congress they threw out the Democratic majority. Well, Democrats say, it's a Republican Congress now.

Bill Schneider, CNN, Washington.

(END VIDEOTAPE)

MANN: So in political terms, who wins, who loses and who is still waiting to find out if they're in trouble?

Joining us now to talk about that is a familiar face, and a welcome one each time, Amy Walter, senior editor of the "Cook Political Report."

Nice to see you again.

If you walked outside right now in Washington, D.C. I think and stopped people on the street, most of them would have no idea who Jack Abramoff is or why he's in trouble. This scandal doesn't seem to be all that big in the public's eye. Is it too early or is it just not that kind of thing?

AMY WALTER, "COOK POLITICAL REPORT": Well, you're exactly right, Jonathan. I mean, this is certainly -- has not reached the level of an Enron scandal or something like that, which has become synonymous for corporate scandal.

But here is the deal: this is a story that's still developing, and I think how you have been following this over the course of your reporting it, we don't have a lot of answers. There are still things that have not been fleshed out yet.

Number one, how many members of Congress specifically could become implicated, involved in this scandal, one way or the other.

Number two, what is Jack Abramoff really going to say? Bill Schneider referred to the fact that he's going to sing, but we don't know exactly what's in his songbook. So we still have to wait and see.

Finally, most importantly, the elections are still months away. Candidates have yet to start campaigning. There is little doubt that he's going to be part -- Abramoff will be part of the campaign fodder in 2006. It's just a question of how substantial it will be.

MANN: OK, with all those questions in the air, we do know a few things, which is that he had relationships with some very prominent people. Tom DeLay comes to mind, the former House majority leader. Is he the man with the most to fear right now?

WALTER: Well, certainly he's the most high profile, and in that, yes, there is a lot to fear there, if you are Tom DeLay. And if you're a Republican, listen, this scandal right now does seem to not be quite as partisan as Democrats would hope it would be. As was pointed out earlier, this is a man who has contributed lots of money to both parties.

So the fact that Democrats want to make this a Republican only issue becomes more difficult. If in fact Tom DeLay does become implicated, heavily implicated, in this, then it makes it easier for Democrats to make the case that this indeed is a Republican scandal. Tom DeLay, the second most powerful person in Washington, majority leader of the House. As a proxy for the party, you know, that becomes a very substantial argument for Democrats to be able to make.

MANN: Now, there is a fine line in all of this. I'm not an attorney and I don't believe you are. Two hundred members of Congress, at least, are believed to have received campaign contributions from Jack Abramoff or his associates or his clients. That's not illegal. But is that going to be an issue anyway? Are people going to be able to look at the fine print? Or is everyone who ever touched this man going to be tarred by it and could we see a wholesale reaction to this?

WALTER: That is really an interesting question because you're right, we just don't know how deep this goes in terms of the number of members who've become personally implicated or indicted by the Jack Abramoff scandal.

The question though is can you pain with a broad brush anyone who has gotten any money or had any association with Abramoff, his clients, those people in association with him. I think that becomes a little bit more of a difficult stretch.

Certainly we've seen throughout the -- in recent times, of course, of campaigning, that one party or another tries to attach their opposing -- their opponent to an unpopular figure with that party. All right, and so in 1994 you saw many Republicans running against Democrats who tried to morph those Democrats into Bill Clinton, who at that time was very unpopular. In 1996, every Democrat running for office tried to make Newt Gingrich the case, tried to attach as many Republicans as possible to, again, another very unpopular member of Congress at that time who was well know.

Now, as you said earlier, Jack Abramoff, not really that well known. Even Tom DeLay. He's very well known inside the Beltway, not that well known outside of it. So at this point, it doesn't carry that same weight that some others could.

MANN: We have just one minute left. President Bush, we heard Candy Crowley say, got $100,000, or his campaign got $100,000 from Jack Abramoff. Could the White House be touched by this?

WALTER: It sure doesn't seem that way. They still seem to be very focused right now on Congress, though we have seen a couple of administrative officials, one in the General Services Administration and one in the Interior Department, who have been mentioned in association with Abramoff. But at this point it really does look like a Congressional scandal.

MANN: OK, Amy Walter, with the "Cook Political Report."

WALTER: Thanks, Jonathan.

MANN: Thanks for being with us once again.

Members of Congress just got a pay raise with the new year. They now make about $165,000. Small change, really, compared to what Washington's lobbyists and its corporate lawyers make.

The lure of money has gotten dozens of politicians in trouble over the years. CNN's Bruce Morton has a look back.

(BEGIN VIDEOTAPE)

BRUCE MORTON, CNN CORRESPONDENT (voice-over): The basic bind or trap or bargain or temptation is very simple. Lobbyists want congressmen to do them favors. Congressmen want money to run for reelection. Can this lead to trouble? You bet.

In November Congressman Randy "Duke" Cunningham resigned after pleading guilty to taking gifts from defense contractors worth some $2.4 million. The Justice Department is now looking at Representative Bob Ney of Ohio because Abramoff aide Michael Scanlon pleaded guilty to conspiring with a congressman (identified by government sources as Ney) to exchange things of value for official acts and influence.

Ney's office has said he did nothing improper.

2002, Representative James Traficant was convicted of receiving gifts and free labor in exchange for political help.

1996, Buzz Luken was convicted of taking $15,000 to help a trade school.

1993, Albert Bustamente of Texas was convicted of taking money to help renew an Air Force contract. Same year, Congressman Nicholas Mavroules pleaded guilty to accepting free cars and a low-rent beach house.

1997-1998, Congressman Mario Biaggi of New York was convicted of accepting Florida vacations in exchange for helping one company and accepting $1.8 million in stock for helping another company get military contracts.

Funniest ever? That would be when one senator, Harrison Williams of New Jersey, and six congressmen of both parties were convicted in the 1980 Abscam scandal, in which FBI agents posing as businessmen and Arab sheiks gave them money. As you can see, there is video.

And there are more. So, are they all thieves and rascals? No. They're probably on average about as honest or as crooked as the rest of us. But it is fair to say that the temptation and the lobbyists are always with them, every day. Every day.

Bruce Morton, CNN, Washington.

(END VIDEOTAPE)

MANN: And that's INSIGHT for today. I'm Jonathan Mann. The news continues.

END

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