Story note: This was the lead story on a three-part explanatory series on money and influence at the state capitol. The series examined the culture on the Tennessee hill, a place ripe for a federal bribery sting that ensnared four lawmakers.June 26, 2005 Sunday 1st Edition
SECTION: MAIN NEWS; Pg. 1A
LENGTH: 3496 words
Where bills become laws, big billfolds hold sway
'Tennessee Waltz' sting shows how traditional coziness between legislators, lobbyists with money opens door to abuse
By BRAD SCHRADE
Staff Writer
When vaunted ethics legislation found its way to the House floor this spring, it was about as welcome as steamed vegetables on a table of greasy meat and potatoes.
Although a public outcry had deemed the law good for them, several legislators angrily complained that it impugned their integrity.
"Today you would think that perception is that if not a half, then a third of us, are thieves -- under suspicion, sus-pect, criminals," said Rep. Larry Miller, D-Memphis.
Said Rep. Frank Niceley, R-Strawberry Plains, "What we're doing here is, we're laying traps for the honest, semi-honest politicians."
Laughter erupted in the crowded House chamber.
Representatives eventually passed the bill 92-3. It banned legislators from acting as paid consultants and lobbyists for companies that do business with the state.
Five weeks later, four lawmakers and one former senator were hauled away in handcuffs, accused of accepting bribes to influence legislation.
The contemptuous reception some gave the ethics bill illustrates how a mix of politics, power and privilege ferments a culture of isolationism on Capitol Hill. Undercover federal agents easily ingratiated themselves in that culture, passing out thousands of dollars in return for favors.
The allegations suggest that Tennessee's legislature is susceptible to exploitation.
Although ethics legislation passed with fanfare, several efforts to require more -- or more regular -- disclosure of the details of power and politics were killed.
The legislature insulates itself from the public with secret meetings, a lack of oversight of members' own conduct and open-government laws they have imposed on other governments but not themselves.
Rarely has the intersection of money and influence in Tennessee government been under more scrutiny than this year. The federal bribery sting capped a legislative session dominated by discussions of ethics.
While the federal indictments allege major corruption, critics say the confluence of money and power is at the heart of the culture on Capitol Hill, playing out in small, corrosive and legal ways every day.
Whether it's for steak dinners or campaign contributions, money buys access and influence and builds relationships, helping shape policy that affects millions of Tennesseans, they say.
"Every human being likes to have as few restrictions on them as is possible or as they can get away with," said Dick Williams, chairman in Tennessee of the good-government group Common Cause.
"Legislators are people with power and influence. There's always going to be special interests with money and the ability to be there and befriend them wanting to influence decisions that should be made in the public interest. The more open things are, the more likely they'll be done in the public interest."
The legislature last month approved a $26 billion state budget. Lawmakers affect the granting of state contracts and grants, and they pass tax breaks and legislation that can benefit a particular special interest.
The arrested lawmakers are accused of accepting thousands in cash bribes in return for sponsoring legislation to benefit a bogus company set up by the FBI. The arrests raise the question of how corrupt the system might be and whether there's a will to fix it.
'David-vs.-Goliath'
Lawmakers conduct much of their business in a bunker-like complex called Legislative Plaza. Its smoke-filled cor-ridors are crowded with lobbyists when the 132-member General Assembly is in session.
Lobbyists outnumber legislators 4-to-1 and carry an arsenal of research and years of relationships built through dinner invitations and campaign contributions to sway lawmakers on behalf of their clients. Some lobbyists are former legislators themselves.
The plaza houses committee rooms, and when it opened in 1975, it represented the legislature's effort to gain inde-pendence from the governor.
The space allowed lawmakers the chance to hire more staff and increase professionalism -- a change from when meetings were held informally in corners of the Capitol or at nearby hotels.
Today, minutes before each house begins its floor sessions, a procession of lawmakers and lobbyists make their way from the plaza to the Capitol through a tunnel. They then take elevators to the top-floor House and Senate cham-bers.
Lobbyists are often referred to as the "Third House" of the legislature. The phrase has even been used in the state-printed legislative manual provided to lawmakers.
Rep. Russell Johnson, R-Loudon, knows this group's power firsthand. He had video all set to roll in a House com-mittee room this spring, outlining the benefits of a bill he backed. He never got a chance to hit "play."
Lobbyists for the beer and beverage industry had weighed in. They vehemently opposed the bill, which would have placed a 5-cent deposit on all cans and bottles sold in Tennessee, as other states do.
Together, the beer, beverage and distilling industries have more than a dozen registered lobbyists on Capitol Hill.
Johnson, an Eaststate Republican, says his "bottle bill" would have discouraged litter on highways, promoted recy-cling and sent additional funds to a cash-strapped state.
The beverage industries saw it as a burdensome tax on their products and a hassle for their clients.
Johnson could never get the necessary two members of the House Local Government Subcommittee to agree to bring the bill up for discussion.
"It's certainly the way the lobbyists play the system," Johnson said. "They had gone around to everybody before-hand and asked them to sit on their hands. It's truly a David-vs.-Goliath."
Hand signals and receptions
The House and Senate chambers are separated by a magnificent marble-floored lobby that is a gathering spot for scores of lobbyists.
They also congregate in the balcony galleries of the chambers. At times, they'll flash hand signals to communicate with lawmakers at their desks on the floor. They can also send in notes to request lawmakers' attention.
Lt. Gov. John Wilder, D-Mason, once complained about the lobbyists' persistence, and mused about the possibility of building a private corridor for lawmakers between the two chambers.
"You can't walk from one to the other now without getting your arm twisted," Wilder said in 1973, two years after he first became lieutenant governor.
Lobbyists represent their clients' interests. That was evident this year when a controversy emerged over the way the Tennessee Farmers Insurance companies do business. The companies are linked to the Tennessee Farm Bureau.
State Commerce and Insurance Commissioner Paula Flowers issued a strongly worded order in February that said the insurance companies were doing business with a Columbia bank -- even though some of their directors and officers had a financial stake in that bank.
Flowers, concerned that the insurance policyholders were not being well-served, declared the dealings a conflict of interest.
Flowers, the state's top insurance industry regulator, ordered the insurance executives to divest their interests within six months -- or stop doing business with the bank.
Instead, the insurance companies and the bankers tapped their influence with lawmakers and got the law changed to allow such conflicts.
"This statute did not move in the direction of consumer protection," Flowers said. "It's frustrating in the sense that it runs against consumer interests."
The bill that sanctioned the conflict was drafted by a lobbyist for the Bankers Association. Lobbyists commonly write bills introduced in the legislature.
In fact, the Tennessee Bankers Association listed seven lobbyists this year in the state's registry. The Bankers' As-sociation Political Action Committee also gave $184,000 to state candidates in 2004. That included contributions to some of the sponsors of the bill in question.
Tennessee Farmers Insurance has three registered lobbyists. And the Farm Bureau has three, according to state re-cords.
Flowers said she couldn't even get the vote on the bill delayed a week to try to work a compromise. Only one law-maker voted against the bill in either house.
Ed Lancaster, attorney and lobbyist for the Farm Bureau and its insurance companies, said Flowers misinterpreted a 1917 law to declare the conflict.
He said the overwhelming support in the legislature was not a measure of the influence of the insurance companies and banking industry. It was more a reflection of the strength of the bill, he said.
"People had business interests under the law as they previously understood it," said Tim Amos, a Tennessee Bank-ers Association lobbyist who wrote the first draft of the bill. "There would have been a large, large number of business interests disrupted under this new interpretation."
Lobbyists argue their clients' cases on bills, make campaign contributions, take lawmakers out to eat -- as long as it's in a group, to comply with state ethics laws -- and help organize receptions at downtown hotels when the legislature is in town.
Such events give both clients or members of a trade organization and lawmakers access to each other, said Mark Greene, chairman of the Tennessee Lobbyists Association.
A common spot for such events is the ballroom of the Sheraton Nashville Hotel across from the Capitol. That's where the fake FBI company E-Cycle Management, staged a fete Jan. 31 in the "Operation Tennessee Waltz" sting.
Rep. Charles Sargent, R-Franklin, went to the reception and later co-sponsored legislation for E-Cycle, but he was not a victim of the sting that snared four of his colleagues. If not for the sting, the reception would have been forgotten like many others that lawmakers attend, he said.
"It wasn't as crowded as most receptions," Sargent said. "The only thing I thought was a little different was they talked about their product and what they were trying to do."
'Campaigns cost money'
The campaign money spigot is turned off during the months of the legislative session. When the session ends, it is turned back on.
But in the hours before the legislature reconvenes every January, it flows hard.
Fundraising during the legislative session was outlawed in Tennessee a decade ago. Before then it was not uncom-mon for legislators to stage fundraisers with lobbyists one night and, within a day or two, vote in favor of the lobbyists' positions.
The change in the mid-1990s was considered reform. Now, both party caucuses hold their big fundraisers on the eve of the legislative session. Democrats and Republicans work in cooperation, staggering the start times of their events so lobbyists can court both sides with no scheduling conflict.
"I think we're still being blamed for some of those things," Greene said, referring to the old system. "It has been cleaned up a lot over the years."
When the session ended a month ago, the fundraising invitations started hitting lobbyists' mailboxes soon after. The election registry, which monitors campaign finance and lobbying, makes it easy on lawmakers. The registry's Web site has a downloadable spreadsheet with lobbyists' addresses for mailing labels.
State Senate Republican Leader Ron Ramsey went to one such fundraiser Monday, a $1,000-a-head fundraiser given by lobbyists at their office.
The event was at the 12th-floor downtown law office of Miller & Martin, which has a lobbying practice. About 20 businesspeople and lobbyists attended the fundraiser for freshman state Sen. Jim Tracy, R-Shelbyville. Ramsey was listed on the invitation as a "special guest."
Ninety minutes before, Ramsey had taken care of some other business at his legislative office. As chairman of the Senate Ethics Committee, he formally received a series of ethics complaints from citizen Barry Schmittou. They in-cluded allegations that "special interests own and control the actions of many legislators."
Ramsey said later that there was nothing inappropriate about lobbyists holding the fundraiser. He said it was a modest lunch, after which he made roughly five minutes of remarks about Tracy, who he said works hard.
Ramsey said campaign fundraising is a required and legal part of politics and does not influence the way he votes.
"Campaigns cost money," Ramsey said. "The one thing I hate the worst about politics is raising money. ... Never once in my 13 years (in office) has anybody said, 'Here's you a $1,000 campaign contribution. I want you to vote such-and-such a way.'"
'Participation opportunities'
Democrats also turn to lobbyists for help.
This past Tuesday, Democratic Gov. Phil Bredesen made a public statement calling for ethics reform, saying again that he may call the legislature into special session.
Later in the week, a Bredesen staffer sent an e-mail to lobbyists alerting them to "participation opportunities" for a party that Bredesen wants to have at his home later this summer.
The fete will be part of a September weekend conference and fundraiser for the Democratic Governors' Association. The kickoff will be a reception and dinner at Bredesen's private Chickering Road residence in Belle Meade.
Deputy Gov. Dave Cooley and Bredesen's campaign finance chairman, Johnny Hayes, a registered lobbyist, will meet Wednesday with lobbyists to discuss those "opportunities," according to the e-mail sent last week by Bredesen campaign fundraiser April Orange.
The party will include a program called "Tennessee: America's Musical Crossroads" produced by Country Music Television. "Dinner will feature Tennessee's finest food and drink," according to the e-mail to lobbyists.
When asked whether the purpose of Wednesday's meeting is to let lobbyists know they are needed to raise funds for the Democratic Governors' Association event, Bredesen campaign treasurer Stuart Brunson said, "Obviously we're go-ing to ask some people to participate in policy discussions, and I'm sure, working with the DGA, we will also ask some people to help raise money," Brunson said.
One of the lobbyists on the e-mail list is Betty Anderson, who is married to House Speaker Naifeh. Naifeh plans to have a fundraiser in the near future to raise money for his "Speaker's Fund" political action committee.
The fund is used to help House Democrats who need campaign money, which in turn helps Naifeh hold on to power. (Ramsey has a similar fund he controls for Republicans.)
Naifeh said he expects to take some public criticism for the fundraiser in light of the current ethics climate. He and his House Democratic lieutenants were criticized in 1997 for brass-knuckle fundraising tactics after the legislative ses-sion.
They called groups of lobbyists in and told them they were not raising enough money and they needed to set dollar targets with their clients. There was even discussion that the Democratic House Caucus would post the results on a board at its annual retreat. Some lobbyists at the time called it a "shakedown," while others said it was business as usual.
Naifeh defended the practice last week. He said the meetings took place away from the Capitol and that Democrats were just trying to keep up with Republicans in a brutal fundraising battle.
The fundraising came after Naifeh had pushed ethics bills for years. The speaker acknowledged the images could be viewed as conflicting.
But, he said, "As long as the public knows that I'm raising the funds for the purpose of keeping good people elected and keeping the majority, I feel that we have a House Democratic caucus that works well together and we are able to do the things that this state needs being done." o
Brad Schrade can be reached at 259-8086 or bschrade@tennessean.com
FIRST OF THREE PARTS
Today: How Tennessee's Capitol Hill is the intersection of politics, power and privilege.
Tomorrow: Lawmakers close themselves off from the people they serve and use their own power to further insulate themselves and protect their culture.
Tuesday: Solutions --how the culture on Capitol Hill could be changed.
Tennessean.com
View this story online to see a list of lobbyists registered in Tennessee this year, plus the following:
o House Bill 1639, which the state's insurance commissioner says legalizes conflicts of interests between insurance company officers and the firms they do business with.
o House Bill 1578, which would have imposed a deposit on all drink containers to fund anti-litter efforts and other programs.
o An e-mail sent by one of the governor's staffers inviting lobbyists to be involved in planning an event for the De-mocratic Governors' Association meeting.
Also at Tennessean.com, type WALTZ in the keyword search field to find previous coverage of the "Operation Tennessee Waltz" anti-corruption sting.
Make your voice heard
o Gov. Phil Bredesen, D-Nashville
Mail: Tennessee State Capitol, Nashville, Tenn. 37243-0001
Phone: 741-2001
E-mail: phil.bredesen@state.tn.us
o House Speaker Jimmy Naifeh, D-Covington
Mail: 19 Legislative Plaza, Nashville, Tenn. 37243-0181
Phone: 741-3774
E-mail: speaker.jimmy.naifeh@legislature.state.tn.us
o Lt. Gov. John Wilder, D-Mason, Senate speaker
Mail: 1 Legislative Plaza, Nashville, Tenn. 37243-0026
Phone: 741-2368
E-mail: lt.gov.john.wilder@legislature.state.tn.us
o Senate Majority Leader Ron Ramsey, R-Blountville
Mail: 303 War Memorial Building, Nashville, Tenn. 37243-0202
Phone: 741-4524
E-mail: sen.ron.ramsey@legislature.state.tn.us
o Rep. Russell Johnson, R-Loudon, House sponsor of the "bottle bill"
Mail: 217 War Memorial Building, Nashville, Tenn. 37243-0121
Phone: 741-3736
E-mail: rep.Russell.Johnson@legislature.state.tn.us
o To contact your legislator or any member of the General Assembly, go to Tennessean.com and type the word LAWMAKER into the keyword search box.
Follow the money
To find out about your lawmakers' campaign contributions, who has registered lobbyists and what the law says about campaign finance in Tennessee, contact the Tennessee Registry of Election Finance:
Mail: 404 James Robertson Parkway, Suite 1614, Nashville, TN 37243-1360
Phone: 741-7959
On the Web: http://www.tennesseeanytime.org/tncamp/
Talk to us
What do you think about the culture on Tennessee's Capitol Hill? Tell us what you think about this series at poli-tics@tennessean.com.
The story so far
Five current or former state lawmakers were arrested May 26 on charges that they took bribes to influence legisla-tion: Sen. Kathryn Bowers, D-Memphis, Sen. Ward Crutchfield, D-Chattanooga, former Sen. Roscoe Dixon, D-Memphis, then Sen. John Ford, D-Memphis, and Rep. Chris Newton, R-Cleveland.
Charles E. Love, a Chattanooga lobbyist and Hamilton County school board member, and Memphis political vet-eran Barry Myers also were charged as "bagmen" who conspired with four of the legislators to make money from an electronics-recycling company called E-Cycle Management Inc.
But it turned out that E-Cycle was a company in name only, despite elaborate displays to the contrary. It was really a front for the FBI, which seamlessly slipped undercover agents into the Capitol's milieu of lawmakers, lobbyists and deal-makers.
Federal prosecutors charge that the five legislators and their associates accepted more than $92,000 in bribes in ex-change for promising to promote a bill that would have allowed E-Cycle to win state contracts to dispose of surplus equipment.
In a detention hearing the day after the arrests, prosecutors played a videotape showing Ford accepting and pocket-ing $10,000 in cash from an undercover FBI agent representing E-Cycle. Ford resigned from the Senate the day after the video was released, though he later said his decision had nothing to do with the charges against him.
-- MICHAEL CASS
FIRST OF THREE PARTS
Today: How Tennessee's Capitol Hill is the intersection of politics, power and privilege.
Tomorrow: Lawmakers close themselves off from the people they serve and use their own power to further insulate themselves and protect their culture.
Tuesday: Solutions --how the culture on Capitol Hill could be changed.
Tennessean.com
View this story online to see a list of lobbyists registered in Tennessee this year, plus the following:
o House Bill 1639, which the state's insurance commissioner says legalizes conflicts of interests between insurance company officers and the firms they do business with.
o House Bill 1578, which would have imposed a deposit on all drink containers to fund anti-litter efforts and other programs.
o An e-mail sent by one of the governor's staffers inviting lobbyists to be involved in planning an event for the De-mocratic Governors' Association meeting.
Also at Tennessean.com, type WALTZ in the keyword search field to find previous coverage of the "Operation Tennessee Waltz" anti-corruption sting.
