-Caveat Lector-
"Bill Clinton's brother-in-law Hugh Rodham ...spoke to lawyers in
the counsel's office about Nora Lum and her husband, Eugene Kung
Ho Lum, who had also been convicted of tax fraud."
FAILED DYNAMIC ENERGY STILL A FOCUS OF US CONGRESSIONAL FUND-RAISING PROBE
Platts Oilgram News
May 1, 1998;
BYLINE: James Norman
Alleged political money-laundering through the oil and gas
business is a potentially explosive land mine buried in the
morass of investigations swamping the Clinton Administration.
Republican Congressional probers now seem determined to pursue
allegations of bribery, hush-money payments and foreign
influence-buying through a tiny, failed Oklahoma gas-gathering
company caught in the scandals: Dynamic Energy Resources.
That resolve showed up Apr 28 when GOP House Speaker Newt
Gingrich accused the Clinton Administration of a concerted
cover-up and vowed to obtain immunity for four key witnesses to
testify before Rep. Dan Burton's House Government Reform and
Oversight Committee.
Democrats on that committee, led by Henry Waxman, blocked the
needed two-thirds immunity vote last week. But Gingrich said he
may get it from a more heavily Republican panel.
Among the four witnesses is Larry Wong, who Gingrich said Apr 28
could have "relevant information regarding conduit contributions"
from Dynamic, controlled by Democrat fundraisers Gene and Nora
Lum. Wong was a director of Dynamic and close friend of the Lums.
Wong is said to be intimately familiar with activities of the
Lums, who pleaded guilty last May to funneling about $50,000
through "straw donors" to the 1994 Senate campaign of Edward
Kennedy and unsuccessful House campaign of their ex-partner in
Dynamic, Stuart Price.
The Lums were sentenced in September to 10 months of community
confinement and home detention, with $30,000 fines, and are
supposedly cooperating with an ongoing Justice Dept probe. But
their plea agreement lets Justice use their information to pursue
new charges against them, raising doubts about their cooperation.
They have demanded immunity to testify before Congress.
Dynamic has been a focus of Burton's investigation over its Nov
9, 1993, purchase of private Tulsa-based Gage Corp and its Creek
Systems gas gathering system. That was one day before a public
trial was to start on Gage's claim it had suffered from unfair
rulings by the Oklahoma Corporation Commission. The claim was
quickly dropped.
Gage's state claim, and a $40-mil federal civil suit, had been
bolstered by the October 1992 revelation that OCC commissioners
had collected bribes from lobbyist Bill Anderson. Anderson,
former OCC general counsel, had represented such big-name utility
clients as Gage's chief nemesis, Oklahoma Natural Gas, the main
operating arm of Oneok Inc and the state's biggest gas
distributor. Anderson had also represented Southwestern Bell and
Arkla Gas, a unit of Arkla Inc, which from 1985 until 1992 was
headed as CEO by Thomas (Mac) McLarty. Arkla's successor, NorAm
Energy, was bought last fall by Houston Industries.
McLarty, now in his early 50's, is a kindergarten friend of
President Clinton and became Clinton's chief of staff in 1992. He
remains a special counsel and special envoy to the Americas
pending his resignation June 30, announced Apr 24, to return to a
family business.
The Gage trial threatened to reveal possible links between
Anderson and McLarty and their alleged meeting one day before a
1991 wiretapped conversation in which Anderson and a law partner
conspired to thwart an FBI investigation. Anderson was indicted
for obstruction of justice in 1993 and convicted in 1995 along
with former OCC commissioner Robert Hopkins on bribery charges,
based partly on conversations taped by fellow commissioner Robert
Anthony, who agreed to be wired in a four-year FBI sting
operation.
There is no indication McLarty's departure from government now is
linked to the Dynamic probe. Indeed, the Dynamic matter is
probably one of the least of the simmering scandals surrounding
McLarty's 18-month stint as Clinton's chief of staff in 1993 and
1994. A Jan 20, 1997, story by Business Week, like Platt's part
of The McGraw-Hill Cos, noted McLarty's appointment as Special
Envoy came after Senate Democrats warned the White House McLarty
could not be confirmed for the higher posts he sought, Commerce
Secretary or Ambassador to Mexico. McLarty's lawyer at that time
denied his Arkla activities were any hindrance to Senate
confirmation.
In a Sep 5, 1997, deposition to Burton's investigators, McLarty
repeatedly denied knowing or meeting Gene or Nora Lum, though
they were listed as attending a fund-raising breakfast McLarty
attended in Seattle Nov 15, 1993. The breakfast was sponsored by
APAC, the Asian Pacific Advisory Council set up in California and
run by the Lums to organize fund-raising events mainly for the
Democratic National Committee.
Among those McLarty did recall meeting at the breakfast was
controversial Democratic money-raiser John Huang, who later was
given a sensitive post and high-level security clearance at the
Commerce Dept despite concern there over his lack of experience.
Huang has close connections to the Riady family and was an
executive of their Indonesian Lippo Group banking empire. A
Senate report last year identified the Riadys as closely linked
to the Chinese government.
Huang and Wong are among 53 House and Senate witnesses who have
pled the Fifth Amendment. Burton, enraged by what he and Gingrich
claim is White House-orchestrated obstructionism, is pursuing not
only technical campaign finance violations but much broader
patterns of influence-peddling. "We are investigating a possible
massive scheme of funneling millions of dollars in foreign money
into the US electoral system," Burton has said. "We are
investigating allegations of gross misuse of our national
security structure." Attorney for the Lums when their newly
formed Dynamic bought Gage in 1993 was John Tisdale, the Little
Rock, Arkansas, law partner of former Clinton attorney and still
close advisor Bruce Lindsey. At the deal closing, Gage co-owner
Ronald Miller told interviewers for a public television show last
year that Gage's office received numerous faxes and phone calls
from the White House to Tisdale.
The Dynamic-Gage deal has raised a myriad of questions about
possible political money-laundering and the possible foisting of
payoff costs onto unwitting utility customers, according to
Oklahoma investigators. The questions start with the price and
structure of the deal. Dynamic, which had no experience in the
oil and gas business, agreed to pay $10-mil for Gage, which was
all but insolvent after years of legal wrangling over Oklahoma
Natural Gas's alleged refusal to live up to a gas purchase
contract.
But unknown to Gage, ONG had granted Dynamic an even more
lucrative gas sales pact to deliver up to 25,000 Mcf/d each
winter at very rich prices. The contract, which runs to 2003,
calls for ONG to pay monthly the highest of three formulas: spot
plus $0.40/Mcf, a minimum price of $2.78/Mcf, or ONG's weighted
average cost of gas.
Such deals are said to be rare, and highly lucrative in gas-rich
Oklahoma. The contract is worth between $40-mil and $65-mil of
profit over 10 years compared to spot market prices, according to
a study last year by an aide to OCC commissioner Anthony.
To fund Dynamic's $10-mil purchase price, the Lums immediately
sold rights to half that ONG contract to Associated Natural Gas
for $7.5-mil. Five months later, Dynamic sold the other half
contract for $11.25-mil to Enogex, the gas production and
transportation arm of Oklahoma Gas & Electric.
That gave Dynamic and the Lums a quick windfall of more than
$9-mil for fronting a no-money-down transaction that resulted in
wiping out an annoying and potentially politically embarrassing
legal problem.
Where did that money go? One of the more explosive allegations in
the Dynamic case, according to court documents, is that some of
it effectively went to then Commerce Secretary Ron Brown, who had
just come under Independent Counsel investigation for corruption.
Former Ron Brown associate Nolanda Hill, in a television
interview last year, said Brown, who died in April 1996, received
the payments through his son Michael. Ron Brown's lawyer has
claimed the payments were to repay college loans.
Michael Brown had been named a director at Dynamic despite having
no energy experience, and took the job after consulting with
McLarty. Michael Brown was paid $7,500/mo in consulting fees,
$800/mo in expenses, a $60,000 country club membership, and 5% of
the cash-laden company, then worth $500,000. It also opened a
Washington office to accommodate him.
Last August Michael Brown agreed to plead guilty to a
misdemeanor, with no prison sentence, for illegally contributing
$4,000 over the limit to Edward Kennedy's 1994 Senate campaign.
The rest of Dynamic's money was quickly dissipated when Gene and
Nora Lum each took out $2.5-mil for themselves for administrative
costs and consulting fees, just before the company filed for
Chapter 11 bankruptcy protection in 1995. The company, now only a
shell with some royalty interests, remains in bankruptcy amid
continuing controversy over the Lums' fees.
But the oil and gas issue is far from dead. On Apr 6, ONG gas
customers Michael McAdams (a former Gage vice-president) and
James Walker filed a petition with the OCC to invalidate the ONG
Dynamic contracts as unreasonable. An investigation is now under
way. ONG claims the issue has already been settled by the OCC's
routine approval of its purchased-gas costs, but an OCC official
said the prudency of those contracts has remained open for
review.
***********
Ron Miller, former co-owner of Gage, died suddenly last Nov 12
from respiratory failure due to unknown causes a week after
entering Baptist Hospital in Oklahoma City. The death of Miller,
58, has been ruled natural causes and an initial investigation
has been closed. An attorney for Miller says that before he died,
Miller turned over "boxes" of audio tapes and documents to one of
the Independent Counsels probing the Clinton Administration, as
well as cooperating with federal grand juries, FBI and Treasury
investigators.
***********
=================================================================
Kadosh, Kadosh, Kadosh, YHVH, TZEVAOT
FROM THE DESK OF:
*Michael Spitzer* <[EMAIL PROTECTED]>
~~~~~~~~~~~~~~~
The Best Way To Destroy Enemies Is To Change Them To Friends
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