September 19, 2002
[download pdf version of this Lobby Watch]

Corporate Villains Seem To Like
Cornyn’s A.G. Slush Fund

Dozens of alleged villains implicated in the current corporate-crime wave have given more than $5 million to a PAC that launders money for an attorney general slush fund that Texas Attorney General John Cornyn helped found in 1999.

As a U.S. Senate candidate, Cornyn rarely mentions the Republican Attorney General Association (RAGA). But during the bubble economy, he often reminded corporate interests that he helped create RAGA to prevent industry-wide lawsuits like the one that states filed against big tobacco.

This mission—and the fact that RAGA hides the identities of its donors by laundering its money through the Republican National State Election Commission (RNSEC)—has prompted protests that RAGA is a lawsuit-protection racket. “This is absolutely an effort by people with special interests to stop attorneys general from pursuing their traditional role as protectors of the public interest,” said Scott Harshbarger, the former Massachusetts attorney general who heads Common Cause.

Because RAGA refuses to disclose which RNSEC funds were earmarked for RAGA, every RNSEC donation is suspect of being a stealth RAGA contribution. Since RAGA’s 1999 founding, RNSEC has received $5.4 million from the PACs, executives and treasuries of corporations that recently have been accused, convicted or have confessed to serious wrongdoing (see below). These charges—some of which are being investigated by attorneys general—include accounting fraud, excessive executive perks, insider trades, improper stock promotions, document shredding, breaking consumer laws and exploiting electric-deregulation loopholes.

RNSEC's Tax-Dodger Money
Global Crossing Bermuda
Tyco Internat'l Bermuda
Accenture Bermuda
Carnival Corp Panama
Triton Energy Cayman Isles
Xoma Corp  Bermuda
Big RNSEC donors include alleged corporate thugs Enron, Worldcom, Adelphia, Tyco, Global Crossing, Qwest and Arthur Andersen. Enron was the No. 1 source of this money, pumping $721,272 into RNSEC (including $282,910 from Ken Lay and $50,000 from Jeff Skilling). While Cornyn returned $200,000 that he received from Enron, his RAGA will not return—or disclose—what it took from alleged corporate crooks. RNSEC, the top donor to the Republican Party of Texas this election cycle ($1.1 million), is popular with companies that incorporated off shore to dodge taxes that they otherwise would pay to Uncle Sam.

Major RNSEC donors clearly could benefit from RAGA’s promises to oppose active attorneys general like Mississippi’s Mike Moore (who is going after alleged WorldCom frauds) and Connecticut’s Richard Blumenthal (who sued Stanley Works to stop its move to Bermuda). Such stains may explain why RAGA launders its money.

Donations From Actual & Alleged Corporate Villains
To the Republican National State Election Committee
Jan. 1999 Through July 2002
Admitted or Alleged Skulduggery
Enron Corp
Huge accounting frauds; TX/CA electricity gaming charges
El Paso Energy
Round-trip trader; grave accounting concerns
Kmart Corp 
SEC accounting probe; changed dubious accounting practices
TXU Corp
TX PUC charges of 'gaming' TX electric system
Did deals hiding Enron debt; NY AG probing stock-pumping charges
*Global Crossing
Insider trading and sham transactions to inflate sales alleged.
Reliant Energy
Round-trip trade admissions prompted federal probes
MCI Worldcom
Executives indicted for $7.2 billion accounting fraud
Interpublic Group
Improperly accounted for $69 million in expenses
Merrill Lynch
Settled stock-pumping charges for $100 million.; Enron deals probed
Round-trip trader. Alleged: accounting/tax fraud, CA gaming charges
Williams Co's
Resold capped CA energy elsewhere; SEC accounting probe
*Tyco International
Improper accounting and executive perks alleged. CEO indicted
AOL Time Warner
Federal accounting probe; ordered to preserve documents
Accounting concerns involving construction-project cost overruns
PG&E Corp
Improper accounting and asset transfers alleged
Qwest Comm.
Restated $1.1 billion; sham transactions to inflate sales alleged
Duke Energy Corp
Feds probing its admitted round-trip trades
Rite Aid Corp
Executives indicted on fraud charges; restated $1.6 billion earnings
Arthur Andersen
Obstructing justice conviction; approved many cooked books
Calpine Corp
SEC urged it to revise financial disclosures
Xcel Energy
FERC records show it discussed gaming CA system w/ Mirant
Executives indicted for fraud after receiving $3.1 billion in loans
Xerox Corp 
Paid $10 million fine after overstating almost $2 billion in revenue
SEC probing role of KPMG partners in Xerox accounting scandal
Charter Comm.
DOJ probe of accounting for capital expenses
Echostar Comm.
10 state AGs probing alleged consumer-protection law violations
PNC Bank
Restated $155 million after loan-transfer-accounting questions
Lucent Tech.
SEC probing $679 million revenue restatement
JP Morgan Chase
Crafted deals hiding Enron debt
Avista Corp
FERC probing alleged manipulation of CA energy markets
CMS Energy Corp
Disclosed overstated revenues from round-trip trades
Note: Includes corporate, PAC and executive donations.
* Reincorporated in Bermuda to dodge U.S. taxes.

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Texans for Public Justice is a non-partisan, non-profit policy & research organization
 which tracks the influence of money in politics.

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