Scandal Taints IT Lobby

Abramoff plea triggers congressional scrutiny; IT industry re-examines practices.

The scandal now swirling around lobbyist Jack Abramoff, a former favorite of the tech industry, could hamper the efforts of IT heavyweights to advance their agendas in the coming year.

The amount the industry pays to influence government decisions now rivals that of veteran lobby operations such as the oil and gas business and telephone companies. Between 1998 and 2004, IT companies reported spending approximately $346 million on lobbying. In contrast, telephone companies reported spending approximately $366 million, according to documents filed with the U.S. Senate Office of Public Records. The strategy: spread dollars far and wide, covering both political parties and all decision makers. The industrys lobby grew from almost nothing 12 years ago to one of the 10 biggest spenders today, with Microsoft Corp. at the forefront of the spending.

But that influential machine may be in danger of breaking down as high-tech companies take a closer look at the lobbyists they employ and the image that those lobbyists are portraying in Washington.

The lobbying scandal precipitated by Abramoffs guilty plea this month to three felonies, including conspiracy involving corruption of public officials, has prompted lawmakers to publicly distance themselves from the system. Members of Congress are racing to introduce measures tightening lobbying disclosure laws, and hearings are slated to begin within weeks.

Abramoff has become notorious primarily for his work with Native American clients, but he lobbied on behalf of a wide variety of businesses, from the Hazardous Waste Action Coalition to the General Council for Islamic Banks and Financial Institutions. Among Abramoffs prominent IT industry customers were Unisys Corp., Microsoft and the Business Software Alliance.

Unisys hired Abramoff in 2003 to advance its causes in Congress and the White House while he was with Greenberg Traurig LLP, according to Senate documents. The Blue Bell, Pa., company paid Abramoffs company a combined $640,000 in 2003 and 2004.

Records reveal that working alongside Abramoff on the Unisys lobbying campaign was a former chief of staff to Rep. Bob Ney, R-Ohio. Ney was identified in the Abramoff case as receiving gifts from the lobbyist, and he has denied any wrongdoing.

Unisys spokesperson Guy Esnouf declined to comment for this article.

The records pertaining to Unisys and Abramoff illustrate one of the main loopholes in the current lobbying rules—the ability to sidestep the spirit of the law and provide less-than-full disclosure. When asked for the specific issues that Abramoff lobbied for Unisys, the response merely stated his efforts went to "promote the interests of Unisys in the Congress and Executive Branch."

Microsoft made use of Abramoffs services in 1998, when the company sought to influence legislation covering encryption, online commerce and network security, according to Senate records. At the time, Abramoff was with Preston Gates & Ellis LLP, to which the Redmond, Wash., software company paid $600,000 in lobbying fees.

Microsoft, through a public relations representative at Glover Park Group in Washington, declined to comment for this article, citing a longtime policy of not discussing lobbying strategies.

No evidence has been revealed that suggests corruption in the lobbying Abramoff did for tech-industry clients. However, reform advocates say the scandal will affect all businesses seeking influence in Washington as all lobbyists find themselves in the spotlight.

"Corporate America is seen as hiring lobbyists who will do anything to get the access," said Mary Boyle, spokesperson for Common Cause, a public advocacy group in Washington. "We think the message to corporate America is that this is not business as usual anymore. Everyones got to take the rules seriously."

The Business Software Alliance, a Washington-based trade group funded by Microsoft and other prominent IT companies, also put Abramoff to work when he was at Preston Gates & Ellis. In 2000, Abramoff hobnobbed with lawmakers and officials in Vice President Dick Cheneys office, as well as 11 federal agencies, to promote software export controls and trade laws with China that would be favorable to BSA members, according to Senate records.

Between 1998 and 2000, Abramoff lobbied on bills covering encryption, online commerce and copyright protection, and his firm received more than $320,000 from the BSA. He sought influence on these issues alongside fellow Greenberg Traurig lobbyists, including a former U.S. congressman from North Carolina, a former general counsel and chief of staff for the CIA, and a former deputy chief of staff for Rep. Tom DeLay, R-Texas.

The BSA declined to comment for this article.

Ties between Abramoff and DeLay, who last year was forced to give up his position as majority leader of the House after being indicted by a Texas grand jury in December on charges of conspiracy involving campaign finance, have cast a shadow over other lobbying operations connected with DeLay.

As part of the scandals fallout, Microsoft will lose one of its high-powered outside lobbying firms, the Washington-based Alexander Strategy Group. ASG, which was set up in 1998 and is owned by a former chief of staff to DeLay, is closing shop because of the bad publicity surrounding Abramoff.

From mid-2003 to mid-2005, Microsoft paid ASG $315,000 to lobby members of Congress on tax legislation, including R&D tax credits. Among the ASG lobbyists working for Microsoft was Tony Rudy, another former DeLay aide, who worked for Abramoff prior to joining ASG.

The tangled web of lobbyists, current and former congressmen, and current and former aides prompted Reps. Marty Meehan, D-Mass., and Rahm Emanuel, D-Ill., to introduce lobbying reform legislation last May. In July, Sen. Russ Feingold, D-Wis., introduced a bill that would require lobbyists to name their specific contacts on Capitol Hill and would subject lawmakers who take favors in exchange for official acts to fines and removal from office.

In light of Abramoffs guilty plea, many more members of Congress are joining the initiative. Sen. John McCain, R-Ariz., introduced a bill that would require lobbyists to file disclosure forms quarterly and report contributions to campaigns and political action committees. It would also lengthen the current one-year ban on ex-lawmakers and aides lobbying their former employees to two years. Sen. Joe Lieberman, D-Conn., signed on as a co-sponsor of the bill last week, giving it hefty bipartisan support.

Abramoffs services for tech

* Unisys, 2003-2004 Abramoff lobbied Congress and the presidents office to promote the companys interests; Unisys paid his firm, Greenberg Traurig, $640,000

* BSA, 1998-2000 Abramoff lobbied Congress, the vice presidents office and numerous federal agencies on issues including encryption, copyright protection, export controls and trade; BSA paid his firm, Preston Gates & Ellis, $320,000

* Microsoft, 1998 Abramoff lobbied Congress, the White House and numerous federal agencies on issues including encryption, online commerce and network security; Microsoft paid his firm, Preston Gates & Ellis, $600,000