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HUD/E.P.A. slush funds: the White House connection.





On September 17, 1982, President Ronald Reagan made a campaign appearance in Flemington, New Jersey, on behalf of Republican Congresswoman Millicent Fenwick, who was locked in a close race for a U.S. Senate seat. Appearing at the San Gennaro festival in Flemington, Reagan interrupted his prepared remarks to tell the crowd he had "an announcement that will surprise all of you. In spite of all our cutting back, the Department of Housing and Urban Development has agreed to supply public funds for 125 units of elderly housing at Park Place in Ewing, New Jersey!" Then, turning toward Fenwick, Reagan joked, "If you don't elect her as Senator we'll take it away."

Six days later, Environmental Protection Agency Administrator Anne Burford and New Jersey Republican Governor Thomas Kean jointly announced that the E.P.A. had awarded six grants to clean up hazardous waste sites in New Jersey.

The timing of these announcements was not a coincidence, of course; nor did they have anything to do with legitimate policy objectives. They were examples, rather, of how the Reagan Administration used E.P.A. and HUD Grants as a political slush fund. Despite the recent housing scandal and an earlier one involving the E.P.A., this manipulation of public money for political ends remains a largely untold story.

In 1983 Rita Lavelle, an assistant administrator of the E.P.A. in charge of the agency's $1.6 billion Superfund program, was indicated on conflict of interest and perjury charges relating in part to her role in using Superfund grants to help elect Republican Congressional candidates. She was subsequently convicted and served four months. At her trial Federal prosecutors portrayed her as an overzealous Republican loyalist working without authorization or approval from the White House. This story was accepted by Congress and the press and remains essentially unchallenged. And to date, the Congressional probes of HUD have focused on the billions lost through fraud and mismanagement and the millions pocketed by such prominent Republicans and HUD consultants as James Watt, Paul Manafort, Carla Hills and the late John Mitchell.

My own investigations, as well as still-secret grand jury testimony and material uncovered by the Federal Bureau of Investigation in connection with the Lavelle trial, show the existence of a massive and potentially illegal program by the Reagan Administration to manipulate tens of millions of dollars in E.P.A. and HUD funds to boost Republican candidates in Congressional and Senate elections. The program, as described by a former high-level White House official and corroborated by other evidence, was run by the White House through the Office of Cabinet Affairs, headed by Craig Fuller. In 1985 Fuller was promoted to chief of staff to Vice President George Bush, and he later was one of Bush's top campaign advisers.

A number of other prominent White House aides, including Michael Deaver and Edwin Meese 3d, also played key roles in this program. It is not known how much Reagan knew about it, but the President surely knew how to play the game: He personally ordered the transfer of HUD funds to finance the New Jersey project for the elderly after Fenwick asked him to do so on September 17 while the two were aboard Air Force One on the way to their joint campaign appearance. The HUD and E.P.A. grants to New Jersey provide a case study of how the two agencies were used during the 1982 election.

On the morning of September 17, a high-level Housing Department official sent the following memorandum to Secretary Samuel Pierce: "I have just taken an urgent phone call [from a White House official] . . . advising the Department that the President, who is en route to New Jersey, has agreed to fund, with Section 8 new construction funds, a 125-unit project in Ewing, New Jersey. He intends to state upon his disembarking from the plane, that he is pleased to announce that HUD has advised it has agreed to provide 125 units . . . for an elderly project to be located at Park Place."

Pierce simply initialed the memo after he read it, and scrawled "Noted," indicating that it was routine for the White House, and not his own agency's administrators, to determine which HUD projects to fund. In a last-minute order, senior officials at the agency transferred funds to New Jersey originally earmarked for a low-income housing project in North Carolina.

Four days earlier, on September 13, Rita Lavelle sent a memo to White House deputy chief of staff Michael Deaver recommending that Reagan take advantage of "an opportunity" provided by the awarding of $5.2 million in E.P.A. grants to clean up six toxic waste sites in New Jersey. Lavelle even suggested a time and place for the announcement to assure the "maximum media coverage" so as to "support the candidacies of New Jersey candidates including Millicent Fenwick."

On September 20, Lavelle and E.P.A. Administrator Burford met at the White House with presidential counselor Meese, according to the two women's calendars, which were obtained by Federal investigators. Meese, Lavelle and Burford would later insist that they could not recall what they discussed at that meeting, but a September 19 notebook entry by an assistant to E.P.A. general counsel Robert Perry, one of Burford's closest aides and confidants, said, "President Reagan wants to visit" the sites of hazardous waste dumps to announce that the White House was providing grants to clean them up. The memo made clear that the timing of the announcement was to assist the races of Republican Senatorial candidates. On September 23, just as Rita Lavelle had recommended to Michael Deaver ten days earlier, Burford and Governor Kean jointly announced the E.P.A. grants to New Jersey.

Far from being overly zealous individuals who went astray, Rita Lavelle and Deborah Gore Dean, executive assistant to Secretary Pierce, were central actors in the White House campaign effort. The similarities between the two women are striking. Both appeared to be unqualified for the high posts they held. Lavelle's most recent experience had been as a public relations assistant for a chemical company. Dean had managed a bar in Georgetown and occasionally edited a society magazine.

But Lavelle and Dean were not lacking in political connections. Lavelle had worked in low-level jobs for Reagan when he was Governor of California. Dean is the daughter of former Republican gubernational candidate Louise Gore and the stepdaughter of Richard Nixon's Attorney General John Mitchell.

As the 1982 Congressional elections approached, the two departments dispensed their largesse with precision and efficiency. Although the White House had backed cuts of $9.4 billion from HUD's Section 8 low-income housing program, some of the remaining money was reprogrammed and spent to boost Republican Congressional candidates. Five HUD projects were announced by Representative Margaret Heckler, who was in a tight race against fellow incumbent Barney Frank because of redistricting. In Illinois, HUD scraped together funding for a fifty-unit project that assisted the re-election campaigns of Robert Michel, the House minority leader, and Peoria Mayor Richard Carver. Michel, as the leading Republican in the House, and Carver, as a member of the President's Commission on Housing, played a key role in cutting billions from the Section 8 program, causing tens of thousands to go homeless. But they and the White House had no compunction about exploiting what little money remained to insure their re-election.

At the E.P.A., Lavelle awarded grants and sped up others that would help Republican candidates. Only days before the election Senator Richard Lugar of Indiana announced an E.P.A. cleanup of a waste site near the town of Seymour. An aide to Lavelle would later tell a Federal grand jury that she and Lavelle watched the election returns on television together, and "Ms. Lavelle told me . . . that she felt that she had helped put Lugar over the top."

By contrast, Superfund grants that would have benefited Democratic candidates were withheld. Burford abruptly delayed funding for the cleanup of the acid pits in Stringfellow, California, a twenty-two-acre site with 39 million tons of toxic and carcinogenic substances, after learning that the cleanup had been pushed by Governor Jerry Brown, who was running for the Senate. According to a high-level Reagan Administration official who was interviewed by the F.B.I., Burford told him, "I'll be damned if I am going to let Brown take credit for that."

Some might dismiss the Reagan Administration's political manipulation of public funds to help elect Republicans as politics as usual. But a similar program during the Nixon Administration led to one of the counts on the bill of impeachment drawn up by the House Judiciary Committee. And Congress subsequently enacted legislation making it a felony to manipulate Federal grant money to influence elections.

The Nixon plan, known as the Responsiveness Program, was once described in a memo by deputy director of the Committee to Re-Elect the President Fred Malek, who devised it: "The President's unique asset in the forthcoming campaign is his control over the Executive Branch. The White House must ensure that the President is able to capitalize fully upon this asset . . . we have already initiated programs to derive greater political benefit, from grants, communications and personnel."

One Federal agency Malek wished to exploit was HUD. A HUD official testified to the Senate Watergate Committee that an assistant to Malek at CREEP "asked that [HUD] set aside [funds for] . . . the Responsiveness Program. Under [the] proposal, an individual whom the White House would designate, but who would not be an employee of [HUD] . . . would make the decision as to how those monies were to be committed. . . . I [said] that in my judgment such a program . . . sounded illegal and certainly improper." Finding the HUD bureaucracy uncooperative, the Administration gave up. Ronald Reagan did not encounter similar resistance a decade later.

Material in F.B.I. files and testimony before the Federal grand jury that indicated Lavelle disclose that her chief contact was Craig Fuller. In addition, two Federal law enforcement officials say that the Reagan Justice Department stopped them from looking into Lavelle's White House ties. A senior Justice Department official, Larry Simms, who was a deputy assistant attorney general at the time, charged in a memo that in his opinion "the EPA investigation . . . has been totally inadequate . . . and that inadequacy was a result of either incompetence or lack of integrity."

Fuller claims that he had almost no contacts with Lavelle. He told a reporter from U.P.I. during a March 10, 1983, interview, "I honestly don't recall having telephone conversations with [Lavelle]. . . . It's possible in two years, that we talked once or twice." On another occasion, Fuller averred that it was possible she "placed calls to me, but I don't recall ever returning one." But at least eight officials of the E.P.A. and the Reagan Administration have given sworn statements and testimony to the F.B.I., a Federal grand jury, and in executive session to a House Energy and Environment subcommittee that Lavelle and Fuller had at least 150 telephone conversations during the time Lavelle was in charge of the Superfund. Emily Morris, a receptionist for Lavelle, recalled Lavelle placing "around twenty-five" calls to Fuller and that Fuller made "approximately the same amount" of calls to Lavelle. Henrietta Janiszewski, Lavelle's confidential assistant, told the subcommittee that she placed "eight to ten phone calls to Fuller" for Lavelle and that on occasion Fuller called Lavelle. Asked if most of the calls occurred "close to election time," Janiszewski said that this was the case and that "around that time . . . she had to drop everything immediately and get over there."

Finally, additional information linking Fuller to Lavelle comes from a highly unlikely source: Edwin Meese. During his Senate confirmation hearings to be Attorney General in 1984, Meese was queried about allegations that he had been involved in manipulation of the Superfund with Lavelle. Senator Max Baucus asked Meese, "Do you recall how many times you talked to her about a particular waste site?"

"I do not recall talking with her about any particular toxic waste site," Meese answered. "I suspect she may be confusing me with Craig Fuller in that testimony." Meese was not asked to elaborate.

In her first extensive interview with a reporter since her conviction and jail sentence, Lavelle confirmed to me that Fuller was her chief contact in the White House: "Everything I did checked very closely with Craig Fuller to see if it was all right to do. I did nothing of importance without informing him about it ahead of time." Lavelle said such phone conversations were "informational" in nature, not "directional": "I told him what I was up to; he never gave me orders. But when I did tell him, he never objected."

Fuller did keep abreast of grants for specific toxic waste sites that were manipulated for political purposes. According to Federal law enforcement agents, a senior E.P.A. official, Frank Biros, testified to the grand jury that Lavelle and two of her aides asked him to prepare status reports for Fuller. Both of the reports sent to Fuller concerned grants to clean up hazardous waste sites that were politically manipulated -- the Seymour, Indiana, and Stringfellow, California, grants already described.

Although Fuller denies having received such correspondence from Lavelle, a second grand jury witness independently corroborated Biros's account. Janiszewski told the grand jury that Lavelle often gave her an envelope marked "Eyes Only" that was to be sent immediately to Craig Fuller at the White House.

At HUD, Deborah Dean maintained a similarly close connection with the White House. She testified to a Federal grand jury in Biloxi, Mississippi, that the White House contacted her on a "regular basis" on behalf of grant applicants: "It was not unusual to have at least one-fourth of the projects on the list that are funded to have gotten a phone call from the White House regarding them." Asked why the White House would contact her, Dean explained, "I was the executive assistant to the Secretary, the chief of staff, and the White House liaison."

Dean head been called before the grand jury to discuss a HUD Grant for a Biloxi hotel project. She testified that she had approved the grant solely because of the intervention of White House officials, and she did not even know that Biloxi is located on the Gulf of Mexico. Associate director of Cabinet affairs Richard Davis, who was Fuller's deputy, was Dean's chief contact with the White House. "It was routine in my job . . . to take anything that came into the White House dealing with HUD and any other agencies and send it to that agency for disposition," Davis recently testified before a House Government Operations subcommittee. But Davis claimed that he never exerted any pressure on Dean to make specific awards.

Dean has refused to testify before Congress, citing her Fifth Amendment rights against self-incrimination. But in pondering her next steps, she might want to consider the case of her counterpart at the E.P.A., Rita Lavelle. The two women were high-level government official's who played a key role in the Reagan Administration's "responsiveness program." Apparently, they were hired because they would be willing to take orders from superiors at the White House. And both women have taken the fall for higher-ups at the White House. Lavelle kept her silence and went to prison. Dean's fate has yet to be decided, while she contemplates whether to implicate her superiors.

Dean's attorney, Joseph diGenova, a former U.S. Attorneys for the District of Columbia, says that if a reasonable deal comes along, Dean might be willing to tell all. What that may be cannot be predicted with certainty, but di-Genova claims that it will "establish beyond doubt that Miss Dean was not an independent operator but rather was acting under direction and with authorization."

Murray Waas is a reporter and longtime contributor to The Nation.
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Title Annotation:Housing and Urban Development; Environmental Protection Agency
Author:Waas, Murray
Publication:The Nation
Date:Nov 20, 1989
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