http://www.salon.com/politics/wire/2001/06/13/rove/index.html
Did Karl Rove violate ethics laws?
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by Pete Yost
June 13, 2001 | President Bush's top strategist, who owned more than $100,000
of Intel stock, met in March with the company's chief executive and two
lobbyists as they pushed for federal approval of a corporate merger. The
administration approved the deal less than two months later.
White House officials said senior adviser Karl Rove referred the computer
chipmaker's executives to others in the administration and played no part in
the approval. Rove does not recall raising the issue with the president,
officials said.
"He offered no advice or counsel with regard to this decision," White House
spokesman Dan Bartlett said. Rove, however, continued to be copied in on
correspondence from Intel and its trade group until the decision was made in
early May, documents obtained by The Associated Press show.
Rove sold all of his stocks last Thursday, unloading a diverse portfolio of
holdings in defense, high-tech, energy and banking companies valued at
between $1 million and $2.5 million.
Some legal experts said Rove should have removed himself from the discussion
with Intel to avoid the appearance of a conflict of interest under federal
ethics laws.
"I think Karl Rove has a lot of explaining to do about how this appears,"
said Mike Gerhardt, a William Mary law professor specializing in
constitutional law issues relating to misconduct in the executive branch of
government.
"If this were the Clinton administration and it was somebody who worked for
Hillary or Bill, then Karl Rove himself would be denouncing it in the loudest
terms possible," Gerhardt said.
Intel chief lobbyist Jim Jarrett said he, another lobbyist and CEO Craig
Barrett met separately on March 12 with Rove and Vice President Dick Cheney
at the White House. The meetings, requested by Intel, also covered Bush's
energy, tax cut and education plans and were "quite useful" in the effort to
win federal approval of the merger between one of Intel's U.S. suppliers and
a Dutch company, Jarrett said.
The deal required government approval because it involved foreign ownership
of a U.S. computer company whose sensitive technology is relied upon by the
military.
"I don't know that you can say that any one meeting tips the balance, but
certainly when the CEO comes to call and makes this one of his priorities, it
demonstrates to him that we think it's important," Jarrett said.
Company executives were unaware Rove owned between $100,000 and $250,000 in
Intel stock at the time.
"We don't concern ourselves with that quite often. The world is filled with
hundreds of thousands of Intel shareholders," company spokesman Chuck Mulloy
said.
Federal ethics laws and rules prohibit an executive official with an economic
interest in a decision from participating through recommendations, advice or
rulings.
The only way Rove could avoid violating the laws was "if he were truly mute
and he offered no comment then or later" on the Intel matter, said Stephen
Gillers, a New York University law professor.
Creating a blind trust or divesting months earlier should have been a "no
brainer," said Sheldon Cohen, who set up the first presidential blind trust
in 1963 for Lyndon Johnson.
"The whole purpose of ethics rules is to avoid the appearance of a conflict
of interest, and having even a hint of an appearance problem destroys
people's confidence in government," Cohen said.
White House spokeswoman Anne Womack said Rove originally decided last
December to sell his stocks in individual companies but then was advised in
January by Bush transition counsel Fred Fielding that he should hold off.
Fielding suggested the White House counsel's office should obtain a
government certificate of divestiture that would allow Rove to defer paying
capital gains taxes on the stock sales.
White House officials said the request for the certificate was delayed
because the counsel's office was inundated with the work of a new
administration such as arranging security clearances for nominees and
developing ethics standards for employees.
During that time, Rove's stock fell about 20 percent and then recovered much
of the loss before the sale.
An AP computer analysis of stock prices indicates the stocks that Rove valued
on his ethics form last December at between $1.2 million and $2.8 million had
dropped in value to between $896,000 and $2.2 million by mid-March. At the
time he sold, they were between $1 million and $2.5 million.
"During the time that White House counsel was reviewing Karl's file, Karl did
receive multiple ethics briefings explaining the importance of avoiding any
conflicts of interest," Bartlett said. "Based on those meetings, Karl avoided
any discussions that specifically or materially affected his financial
holdings."
Rove's session with Intel wasn't the only one with an industry in which he
held a financial stake, according to
