The following Internet address pertains to another scandal involving Beacon Corporation entitled "Federal Pork And White House Coffees" 14.html


By Kenneth R. Weinstein Director, Government Reform Project

August Stoflerahn Deputy Director, Government Reform Project

The Heritage Foundation

Government Integrity Project Report No. 14 July 14,1997

Most campaign finance reform proposals seek to limit the amount of money that individuals or
ganizations may donate to political candidates. Meaningful reform, however, may be unattainable less one of the major reasons for making campaign contributions--the desire to seek special rors from government--is eliminated. Perhaps no recent series of events better illustrates the KUS between big government and the world of campaign fundraising than the White House (Fees that the Clinton Administration allegedly used to raise funds for the President's re-election campaign.

The first comprehensive comparison of the list of attendees at these coffees and databases of leral grants and contracts indicates that many of the organizations represented at White House ffees receive federal funds. Indeed, these representatives may have been invited to coffees ;ause their organizations were already doing business with the federal government and, hence, re seen as potential campaign contributors.

The overwhelming majority of these grants and contracts predates the Clinton Administration. iproximately three-quarters of the federal funds disbursed to coffee guests went to five defense itractors whose procurement relationshins with the federal gonvemment...suffered a net decline in FY 1996 federal funding when compared with FY 1995.

At the same time, however, a few of the guests at the White House coffees did receive contracts appear questionable. Among previously undisclosed examples of largesse to coffee attendees, most prominent are:

* A contract awarded to The Kamber Group while its senior vice president, Lynn Cutler, served as chairman of Back to Business, a committee established to defend the White House against ethics charges;

* Contracts and grants awarded to Triangle Environmental while its chairman, Thomas Hendrickson, was a prominent fundraiser for the Democratic National Committee (DNC);

.Contracts awarded to the Truman Arnold Companies, whose chief executive officer (CEO), Truman Arnold, served as finance chairman of the DNC; and

* A contract given to the Communications Workers of America (CWA) that had been set aside for a female-owned small business.


Few recent news items garnered more national attention than the disclosure that, between January 5 and August 1996, President Bill Clinton, First Lady Hillary Clinton, Vice President Albert
*e, and Mrs. Tipper Gore hosted prospective campaign donors for coffee at the White Housed i illegal to raise campaign funds on federal property, and the 103 coffees held at the White ise, the Old Executive Office Building, and the Naval Observatory (the residence of Vice sident and Mrs. Gore) were not termed "fundraisers." At the same time, internal White House uments indicate that these events were orchestrated, as one journalist put it, "to soften up
ential contributors" to the DNC.2 The strategy proved effective: During the 1996 election
Ie, attendees and their organizations contributed over $27 million in "soft money" to the DNC.^ ft money contributions are made to party committees, instead of to individual candidates, and amount of these contributions is not limited by federal election law.)
a news conference following these revelations. President Clinton defended the coffees: "I think a good thing when contributors care about the country and have some particular area of ertise they want to contribute. But nobody buys a guaranteed result, nor should they ever. They
uld get a respectful hearing."4
he debate over campaign finance reform--largely generated by such controversies as the White use coffees--a central fact is often overlooked: The sheer size and scope of the federal wnment alone attracts influence seekers to Washington, D.C. The federal government now nds $1.6 trillion each year--a figure equivalent to the entire economies of Canada, Mexico, and
People's Republic of China.5 This sum--spent on programs in nearly every sector of the nomy, from border patrols to missile systems to subsidies for mohair farmers--represents 23
cent of the U.S. gross domestic product, up from 18 percent in 1960 and 4 percent in 1930.6
u-ly $250 billion--almost half of all discretionary spending--is disbursed annually by agencies I departments to businesses and nonprofit organizations in the form of grants and contracts.
*ant recipients who sent officials to White House coffees also receive federal funds.
side from DNC and government officials, most of the coffee attendees were lobbyists and >rporate or labor leaders. At least 729 attendees represented businesses, labor unions, interest
*oups, universities, and other nonprofit organizations.8 27 percent of them--or 199--represented oups that receive grants or contracts from the federal government.
snsus Bureau data indicate that organizations represented at White House coffees received over !25 million in grants and loans from federal agencies during FY 1995 (the latest year for which
^ures are available).9 According to information published by the General Services Administration irSA), businesses and nonprofit groups represented at these functions received federal contracts
taling $29.2 billion in FY 1996 and $30.4 billion in FY 1995.10 Thus, $1 out of every $8 in deral grants and contracts went to organizations represented at White House coffees. Again, ;arly all of these contracts and grants represent long-standing relationships and have nothing to »with participation in White House events. Instead, some of these groups may have been invited coffees because they had not yet been forthcoming with campaign donations.
svertheless, one fact stands out: more than half of the $27 million raised by the Democratic Party rough White House coffees--$14.4 million--was contributed by federal grantees and
vestigative reporters have revealed instances in which the circumstances surrounding grant or 'ntract awards have created at least the appearance of a connection between policymaking and mpaign contributions:
The Beacon Companies/Energy Capital Partners. The president and CEO of Boston-based Beacon Companies, Alan Leventhal, attended three White House coffees and spent the night at the White House. Leventhal's business partner, Fred Seigel, attended two coffees at the White House. White House records list Seigel's corporate affiliation as Beacon Energy Company; however, he also serves as president of Energy Capital Partners, a company that was spun off from the Beacon Companies and that the two men co-own. Leventhal and
Seigel raised more than $3 million for President Clinton's re-election campaign,-" and
President Clinton once dubbed them the "energizer bunnies" of political fundraising.^ The Beacon Companies also contributed $190,000 to the DNC and another $148,600 to the
Presidential Inaugural Committee during the 1996 election cycle.L4
In 1996, according to The Wall Street Journal, Energy Capital Partners won a
lucrative federal lending contract.^ Under this deal. Energy Capital Partners was designated the first and only company pre-approved for participation in a risk-free $200 million lending program administered by the U.S. Department of Housing and
Urban Development (HUD) to service Fannie Mae loans.16 The deal could have generated millions of dollars in profits; but after the Journal story appeared, HUD canceled the program and referred the matter to its inspector general for examination.
Energy Capital Partners is suing HUD in federal court for breach of contract.17

The President's Secret Money Machine Page 1 of 5
Political Economics - Page Al
Updated February 9, 1997
Money Talks Ethics Walks:
The Clinton Money Trail of Tears
WASHINGTON DESK - President Clinton has told the American people that Clinton-Gore campaign donors who have been invited to the White House got nothing.
However, the Daily Republican has learned that the president has been directing a secret a plan, approved in 1993 by both Bill Clinton and Al Gore, to obtain money by renting out the bedrooms of the White House, selling places at State dinners, and holding an endless series of'coffee events'.
Money scored in these activities was pumped directly by the DNC into anti-Republican ads. The DNC became an extension of the Clinton-Gore campaign. Clinton says all he did was to attend a few coffees and listen politely, take money but do nothing.
Clinton and Gore attempt to ignore the criminal implications of their actions. Those donors had business matters pending before the government. Clinton attempts to ignore the fact that after time money changed hands in the White House there are documented changes in U.S. policy and its implementation that benefited those donors who met in the coffees with the president,
He also ignores the fact that after the policies were moved to accommodate the donors, additional transfers of cash from the donors to the Clinton-Gore Campaign took place. It appears that presidential influence was bought and paid for.
White House spokesman Lanny Davis says that Clinton 'makes his decisions about policy and governmental actions based on the national interest.'But, the facts belie David's protestations of selling influence by the president.
For example, the Los Angeles Times reported on Saturday, that Alan Leventhal and Fred Seigel, of Boston, went to the White House and met with president Clinton in early 1995 They wanted to make a deal with Clinton.
Characteristic of Clinton's style, he met with them. He wanted something they had. With his popularity sagging,Clinton needed Leventhal and Seigel, to bring in large political contributions for the Clinton-Gore Campaign for re-election.
Alan Leventhal and Fred Seigel were well known Democrat Party fund raisers who
he President's Secret Money Machine Page 2 of 5
would collect $3 million for Clinton-Gore. Leventhal donated $185,000, himself, to make certain that Clinton would appoint his company Energy Capital Partners as the Department of Housing and Urban Development major lender in the new Al Gore program where the government would spend $200 million to make federally assisted housing more energy efficient.
President Clinton was so enthusiastic about Leventhal and Seigel's 'money getting machine' that he had HUD enter into an arrangement allowing Energy Capital to be repaid ahead of the government if housing-development owners defaulted. If that wasn't enough, the federal notice outlining the loan program mentioned Energy Capital and Seigel by name.
The result of the political campaign funds raised by Leventhal and Seigel for the Clinton-Gore Campaign was that the company is the only pre-approved lender. So, Energy Capital is the exclusive lender now servicing the new loan program. The funds for the loans will come from the Federal National Mortgage Association. With this generous Clinton pay-back Energy Capital is positioned to collect millions of dollars of profits in interest and fees.
Evidence of president Clinton's face-to-face contact with the men behind the Clinton money getting machine is well documented in the public records -
* Leventhal came to two coffees with the president in 1995 and Seigel attended three others.
* Leventhal was on the White House south lawn for the 1993 signing of a Mideast peace agreement between Yitzhak Rabin and Yasser Arafat.
* Leventhal also attended a reception for Russian President Boris Yeltsin and a state dinner for South Korean President Kim Young Sam.
Leventhal & Seigel were in the White House on a regular basis. President Clinton and his top aides regularly conducted the government on the basis of the size of the donations collected. The evidence of the merging of the political fund raising and governance of the nation is only now fully emerging from the shadows of the White House. The amount of time spent by the president raising money and the influence and access available to donors exceeds anything ever dreamed of by political power brokers and lobbyists in the history of the United States.
The Times reports that it is now routine White House practice for Democrat Party fund raisers to be granted special meetings with the president inside the White House, where they could make their pleadings on specific policy matters. Large sums were often donated right around the time of some of these presidential audiences. Administration officials joined in the fund raising, bringing them over the line of the legal limits on political activity by government employees.
Seigel openly boasts that he was seeking underwriting business at HUD when he attended White House coffees.
News accounts in the Daily Republican since 1993 have attributed the Democratic National Committee fund-raising controversy to financial pressures created by the failing Clinton presidency. The Wall Street Journal had carried stories revealing a Clinton pattern of mixing governing with fund-raising.
From the very beginning, the President and first lady were secretly going about the