-Caveat Lector- FEC Drops Business Group Probe Staff Report Is Critical but Says Ruling Makes Case Untenable By George Lardner Jr. Washington Post Staff Writer Tuesday, June 19, 2001; Page A04 The Federal Election Commission has decided to drop a four-year-old case accusing major business organizations of illegally coordinating their 1996 campaign efforts with the Republican Party, but only after a stinging report by FEC investigators that questioned the credibility of "much of the testimony." FEC lawyers said in their final report that "the facts make for a compelling case" of illegal coordination under the rules in place during the 1996 campaign but could not meet a restrictive standard the commission adopted last year. They recommended the case be closed, which the commission did last month. The business groups, which undertook a $5 million advertising campaign to defend House Republicans against a $35 million attack by the AFL-CIO, responded angrily in a letter to the commission last week, denouncing the staff report as "inaccurate, vindictive, defensive and stunningly unfair." Banded together as "the Coalition," the industry groups protested that they had been treated more harshly than the AFL-CIO, which the FEC stopped pursuing almost a year ago despite what the Coalition said was stronger evidence of "coordination" between organized labor and the Democratic Party. "The Coalition clearly had nothing approaching the day-to-day inside contacts with campaigns and candidates enjoyed by the AFL-CIO," Coalition lawyer Jan W. Baran said in the June 13 letter. Yet, he said, the FEC dropped the investigation of organized labor without taking any depositions and without reviewing thousands of pages of discovery documents. The FEC subpoenaed nine witnesses in the Coalition case and took the last deposition in March after winning a court order compelling it. The final staff report, signed by FEC acting general counsel Lois G. Lerner in April, said "much of the testimony is less than credible." A copy of the report and the Coalition's response was made available by a Coalition member. The FEC report noted that the witnesses for the most part "denied or could not recall any discussions" with then-House Republican Conference Chairman John A. Boehner of Ohio, widely described as the man in charge of "taking on organized labor," or other party leaders or candidates about the Coalition's ads or activities, the AFL-CIO ad campaign or a response to that campaign. Representatives of the five founding members of the Coalition -- the U.S. Chamber of Commerce, the National Association of Manufacturers, the National Restaurant Association, the National Association of Wholesaler-Distributors and the National Federation of Independent Business -- regularly attended meetings Boehner held each Thursday with business and trade groups to discuss ways of winning congressional passage of the GOP's "Contract With America" and how to "mobilize" members. According to the FEC report, the Coalition was established in April 1996, shortly after Boehner warned in a speech to the U.S. Chamber of union efforts to "defeat the Republican majority in Congress" and reelect President Bill Clinton. It eventually signed up more than 30 business groups as members and hired pollsters and media consultants who also worked for the Republican National Committee and other GOP committees and candidates. The first Coalition ads began airing in July 1996 in the districts of two Republican freshmen who had been targeted by the AFL-CIO, Greg Ganske of Iowa and George R. Nethercutt of Washington state. The business forces carried their fall advertising campaign to about 41 congressional districts and capped it by mailing out 2 million "report cards" on candidates 10 days before the election. But while Coalition leaders showed Boehner the early test ads and gave a Boehner aide tapes of the rest, they said they did not discuss the ads' contents with Boehner and provided the copies only so he could "see what his allies in the business community were doing, about which he knew nothing beforehand." The Coalition witnesses also denied that Boehner or any other GOP leader had urged or suggested formation of the Coalition. The FEC lawyers expressed sharp doubts about such claims but said they were unable to find "evidence of coordination" that would meet the stringent demands imposed by a controversial 1999 court ruling in a Christian Coalition case, which the commission chose not to appeal. U.S. District Judge Joyce Hens Green issued the Christian Coalition ruling and made clear that she expected it to be appealed. The decision, election lawyers said, made it almost impossible to prove illegal coordination, requiring, for instance, proof of "substantial discussion or negotiation" between a political campaign and an outside group about the content, timing and location of a particular ad. The FEC said the Coalition's test-ad choices remained "especially troubling," in part because of a fax the House Republican Conference received about an AFL-CIO ad in Nethercutt's district, but it doubted that further depositions would be fruitful, particularly with the five-year statute of limitations about to expire. Coalition lawyer Baran took strong exception to the FEC staff's claim that a case could have been made under its old rules. He said those rules were "so gauzy and uncertain" that Judge Green declared them unconstitutional. The report, he also complained, "makes much of witnesses' inability to provide detailed accounts of meetings" without pointing out that "the commission waited four or five years after the meetings to ask its questions." Dirk Van Dongen, president of the Wholesaler-Distributors Association, whose own credibility was questioned in the report, said it was full of "aspersions and innuendo," unlike last year's report on the AFL-CIO case. "I know what we did and what we didn't do," Van Dongen said. "I know we did not cross any line we knew we should not cross. We're not stupid people. And we're not that adventurous. [AFL-CIO President] John Sweeney got up on his soapbox and told the world what he was going to do. 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