The too-generous help of influence-seeking "friends" and shady dealings regarding a book eventually hung Speaker Jim Wright. Now, the same elements may prove Newt Gingrich's undoing. In late July, the House Ethics Committee was preparing to launch an official investigation of Gingrich.
Then in early August, the picture darkened still further for him. Representative Bill Alexander, a Gingrich foe, sent a letter to the committee alleging he had evidence of "over two hundred" instances of potentially unethical practices-including illegal campaign contributions and a "questionable" real-estate deal.
A primary object of the committee's scrutiny so far is the unorthodox deal Gingrich constructed to promote his 1984 book Window of Opportunity. When his publisher deemed the work not marketable enough to warrant a hardcover run and extensive promotion, Gingrich created a private partnership, COS Limited, managed by his wife Marianne. Twenty-one donors, most of them wealthy businesspeople or influential Republicans, including beer baron Joseph Coors, kicked in $5,000 each for advertising and a Gingrich book tour. Publisher Jim Baen then agreed to print the book in hardcover as well as paperback, ensuring Gingrich the higher royalties possible from hardcover sales.
Marianne Gingrich was paid $11,500 by the partnership, and the Gingriches have netted $24,036 in royalties-on sales of only 29,000 copies. Baen has said he knows of no similar deal in the publishing industry; Gingrich has termed it "weird," but defends it as a straight business venture.
Gingrich's critics read it differently, charging that the $5,000 contributions were illegal gifts. Some of the partners have indicated that giving Gingrich exposure, not making money, was their main motivation. "It was a soft investment," local developer Joel Cowan told Michael Hinkelman of the Atlanta Business Chronicle. "The reason I got involved was because I wanted to help disseminate his [Gingrich's] ideas." COS Ltd. lost more than $100,000 during the book's first five years, and partners got tax write-offs, which may be illegal. According to the tax publication Highlights & Documents, "If the point of the book was to promote Gingrich's career, then the expenses of promoting it could be classified as political campaign expenditures," which are not tax-deductible.
Window of Opportunity investors and their family members also contributed at least $60,000 to Gingrich congressional campaigns between 1978 and 1988. And some of them have bid on or received federal contracts. One question certain to be uppermost in the minds of the ethics committee: Didn't many partners join his high-risk venture simply because he was in a position to sway legislation to their benefit? "This was no riskier than a Broadway play," asserts Gingrich. "I'm a public celebrity ... so is William F. Buckley. William E Buckley routinely raises a lot of money for National Review every year without any legislative influence."
So they invested in the book because Gingrich is a celebrity, not because he is a congressman? "That's right," Gingrich replied.
Long before Gingrich could call himself a celebrity, however, he raised $13,000 for another book. In 1977, after two losses, Gingrich was gearing up for a third, successful run for Congress, but was snapped for cash, say those close to him at the time. A group of prominent Republican businesspeople formed a limited partnership to advance him the money to write a novel about the Russians invading Europe. Gingrich used the $13,000 to take his family on research trip to Europe, but he never produced a complete manuscript. Gingrich says this, like the COS partnership, was an aboveboard venture that didn't work out; he simply found out he was no novelist.
The deal for the 1977 novel "was nothing more than a sweetheart arrangement by a select group of Newt Gingrich's wealthy friends," charges Arkansas Representative Beryl Anthony, Jr., chairman of the Democratic Congressional Campaign Committee (DCCC). "After eleven years and no book, now appears the real objective of this business partnership was to allow Gingrich a means financial gain not available to the average American."
For a self-styled champion of entrepreneurship, Gingrich's own ventures tend to raise more accusations than money. Last year, the DCCC charged a Gingrich-headed political action committee, Conservatives for Hope and Opportunity (CHO), with mail fraud. An April 1986 direct-mail piece signed by Gingrich assures previous donors, "Your gift has been put to work helping CHO fund conservatives running for the House of Representatives in this year's election," then hits up the reader for more money. In fact, while CHO raised $217,868.80 from March 1985 through June 30, 1987, only $900.00 was spent on direct contributions to candidates. The rest was spent on direct mailings, fees for consultants and vendors, and travel for Gingrich.
On January 31, 1988, nine days after the DCCC filed its charges, CHO told the Federal Election Commission that because it "is now obvious that CHO cannot get out of debt," it had ceased fund-raising. That averted an investigation, but Anthony is convinced Gingrich and his PAC knowingly bilked the public. CHO treasurer Robert Weed has admitted, "We realized about the middle of 1986 that we were going to crash." Asks Anthony, "If they knew CHO was a failure in mid-1986, why did they continue to make claims to donors that their money was going to candidates?" Gingrich's defense: "Everything we did was clearly, without any question, within the normal pattern of American politics."