Barbour: Gop Took High Road Highest-Profile, Most Combative Witness Takes Offensive On Fund Raising

With a mix of down-home charm and icy dismissiveness toward Democrats, the Republican National Committee’s former chairman denied Thursday that even “one red cent” was illegally diverted from a controversial $2.1 million foreign loan into GOP election campaigns.

Former RNC chairman Haley Barbour flatly rejected every major Democratic allegation of GOP impropriety, as well as a one-time top aide’s assertion that Barbour knew that a $2.1 million loan guarantee to a conservative think tank tied to the GOP came from Hong Kong.

The loan guarantee, the Democrats’ biggest counterclaim so far in hearings inspired by their own 1996 fund raising, was perfectly legal, and whether he knew its source is irrelevant, Barbour told the Senate panel.

Barbour was the highest-profile, and most combative, witness so far in the three-week hearings before the Senate Governmental Affairs Committee. If there were doubts about the gravity and orchestration of his appearance, it was dispelled as he arrived with a phalanx of no fewer than eight lawyers - all middle-aged men in gray suits.

Democrats had hoped to make the 49-year-old lawyer-lobbyist into exhibit A in making their case that when it comes to campaign law violations, “the other guys do it too.” But Barbour refused to play the role of passive target assigned to him, and his 30-minute opening statement left the Democratic strategy in shreds.

“This is and should be a bipartisan investigation,” the native Mississippian declared. “But it is not a bipartisan scandal,” he added, flatly rejecting Democratic claims that the GOP shared the blame for the fund-raising excesses that sparked the hearings.

More than just mounting a vigorous defense, Barbour carried the battle to the opposition, finding ways to gibe at Democratic senators. He particularly targeted John Glenn of Ohio, the committee’s ranking minority member.

No fewer than three times Barbour brought up Glenn’s involvement in the scandal involving Charles Keating, a large campaign contributor in the 1980s who sought the intervention of those who benefited from his generosity in federal investigations of his savings and loan operations.

While Glenn, who is still angered by the charges made against him in the Keating affair, visibly smoldered, Barbour smoothly told him: “I understand very well the resentment that boiled up in you … but I’m going to do my best to keep my own outrage under control.”

A more roundabout volley came as he conceded that one $25,000 contribution to the think tank was foreign, via a group in Taiwan. He turned to Sen. Dick Durbin of Illinois and announced that the same group “has, Sen. Durbin, done such things as sponsor the appearance of the Classical Symphony Orchestra of Chicago on Taiwan,” to underscore how benign and high-minded the think tank is.

During nearly six hours of testimony, he fenced with the committee over the National Policy Forum, a group he created and chaired while running the RNC. The forum was established as a 501(c)(4) corporation under tax laws, meaning it was tax-exempt as long as it was nonpartisan and nonprofit.

But what Barbour called “the most participatory public policy institution ever,” and one that was supposedly separate from the RNC, Democrats characterize as a Republican National Committee handmaiden through which funds were illegally laundered. By day’s end, one prominent Republican senator joined Democrats in expressing skepticism about Barbour’s depiction.

In particular, Democrats focused on a $2.1 million loan guarantee Barbour aggressively sought and got from businessman Ambrous Young of Hong Kong. Evidence shows that most of the money, meant for the debt-ridden think tank, wound up in RNC coffers as part of a debt repayment at a crucial period late in the 1994 congressional election campaign.

It would have been legal for foreign money to go to the think tank, but not to the committee and not for use in election campaigns.

A letter introduced Thursday, from Barbour to Young, said Young’s help was urgently needed and directly related to the November election. Confronted with the letter, Barbour said the letter had it all wrong.

Barbour admitted that $1.6 million of the loan immediately was transferred to the RNC. But he appeared to deflate Democratic claims by declaring that it was kept in an account separate from the account used for campaigns.

In an acrimonious exchange involving Barbour and Sen. Robert Torricelli, D-N.J., the duo disputed whether the RNC had needed a hefty cash infusion in late 1994.

Barbour said the RNC didn’t because it had $5 million on hand, while Torricelli cited federal election filings indicating the committee had just $713,000. Barbour’s analysis, it turned out, included a large line of credit.

Barbour cited as erroneous the testimony earlier Thursday of a former top aide, Houston businessman Fred Volcansek, who generally supported Barbour but insisted that he told Barbour the Young money came from Hong Kong. The $2.1 million moved from Hong Kong to a virtually assetless Young subsidiary in Miami, which Barbour said he assumed was the source.

Similarly, Barbour said that Young’s assertion that he told Barbour the source of the money was lost amid a failure of communication. Barbour said he had a difficult time understanding Young, given the accent of the Chinese-born, Taiwanese citizen.

Barbour continually rebutted indications of a strong nexus between the think tank and the RNC.

Presented with an RNC memo that referred to the think tank as a committee “subsidiary,” a droll Barbour dismissed the suggestion and drew laughs even from Democrats.

“Yes, this was written by a staff member, who is my nephew,” he said, theatrically pausing, “and still is my nephew. But he screwed this up.”

Still, even the Internal Revenue Service wasn’t convinced the think tank was completely pure.

Evidence indicated that on Feb. 21 the IRS rejected a longstanding request for a tax exemption after concluding the group was a “partisan, issue-oriented organization … designed to promote the Republican Party and politicians affiliated with the Republican Party.”

The gray area bothering the agency did not rankle just the Democrats. Committee Chairman Fred Thompson, R-Tenn., was visibly frustrated with part of Barbour’s testimony and chided him, “You ought to be able to understand there wasn’t sufficient separation.

“You’re sitting on a boat in Hong Kong. … That does raise questions,” Thompson said. The chairman then noted how the think tank defaulted on a large chunk of the loan to Young, who lost $800,000.

“Looks to me like we owe this man some money,” said Thompson. “He’s holding the bag for $800,000. A deal is a deal.”

MEMO: This sidebar appeared with the story: MORE TODAY The hearings resume today with more testimony about the relationship between the think tank and the Republican National Committee.