-Caveat Lector- http://www.chron.com/cs/CDA/ssistory.mpl/metropolitan/1830592 March 22, 2003, 12:30AM
Campaign finance probe puts sights on DeLay Corporate contributions questioned By R.G. RATCLIFFE Copyright 2003 Houston Chronicle Austin Bureau AUSTIN -- A political committee set up by U.S. House majority leader Tom DeLay has been swept into a Travis County grand jury investigation of possible illegal corporate spending in last year's Texas House elections. DeLay's aides said there was nothing illegal in how the corporate money was raised or spent in Texas. DeLay, R-Sugar Land, created Texans for a Republican Majority as an offshoot of his Americans for a Republican Majority. The Texas committee was designed to help the GOP win a Texas House majority and put Rep. Tom Craddick, R-Midland, in as speaker. Texans for a Republican Majority raised more than $520,000 -- a third of all its money -- from corporations. The contributions included $20,000 each from Bacardi U.S.A. and the Philip Morris Cos. and $100,000 from the Alliance for Quality Nursing Home Care, a coalition of nursing home chains based in Boston. While a political committee can legally raise corporate money to pay for administrative expenses, it would be illegal to use corporate money for political activities. TRM also coordinated its activities with the Texas Association of Business, which is the target of the grand jury investigation. Travis County District Attorney Ronnie Earle is investigating whether the business group illegally used corporate money to pay for issue ads designed to win 20 House seats for the GOP. The ballot box victories gave the GOP a House majority, which elected Craddick as speaker. The Texans for a Republican Majority corporate contributions appear in the group's filings with the federal Internal Revenue Service but are not included in its state filings with the Texas Ethics Commission. Earle declined to talk about the grand jury investigation. "We are aware of the (IRS) filings, but we can't discuss it," Earle said. TRM's former Texas director, John Colyandro, has received immunity to testify before the grand jury investigating the business association. Colyandro could not be reached for comment. Jim Ellis, a director for both the state and national DeLay committees, said he was unaware of any grand jury activity involving Texans for a Republican Majority. He defended the committee. "We got all kinds of legal documents when we set it up and sat down with legal counsel and said, `No, this is perfectly permissible,'" Ellis said. Ellis said the state political committee and the IRS Section 527 committee actually are the same organization. He blasted the McCain- Feingold campaign finance law that requires more disclosure with the IRS than is required under Texas law. "This is the over-reaching nature of this ridiculous campaign law that curtails free speech while we have soldiers dying ... to fight for these freedoms," he said. Ellis said separate accounts were kept so the corporate contributions were not donated to House candidates. He said the corporate money was used to pay for staff salaries, fund-raising and "communication on issues." Among the expenditures listed in the federal filing that do not appear on the state filing is $30,777 in fees to DeLay's daughter, Dani Ferro. She often works as a fund-raiser for DeLay. Sarah Woelk, general counsel for the Texas Ethics Commission, said state law would allow corporate money to pay for utilities or office space, but not for fund-raising or any activity designed to affect the outcome of an election. Fred Lewis of Campaigns for People said the filings show DeLay is trying to bring the federal system of undisclosed soft money into Texas elections. "Rep. 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