Texans for Public Justice

Deal calls for funding program on companies' role in democracy
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By CHRISTY HOPPE AUSTIN December 10, 2004

The Travis County district attorney has dismissed the indictment against one of the eight corporations charged with making illegal political contributions in the 2002 Texas House campaign.

Charges against Diversified Collection Services were dropped Thursday in exchange for the San Leandro, Calif., debt-collection company agreeing to shun political contributions in Texas, cooperate with the prosecution and financially support a public program on the role of corporations in democracy.

The company was among the businesses indicted in September for giving thousands of dollars to the Texans for a Republican Majority political action committee, known as TRMPAC.

It is illegal in Texas for corporate or union money to be used in political campaigns. Officials from TRMPAC, which was started with the help of House Majority Leader Tom DeLay, also were indicted.

In the 2002 campaign, TRMPAC raised about $600,000 in corporate contributions, with much of it being spent on pollsters, phone banks, fund-raisers and political consultants. The group sought to ensure a GOP majority in the Texas House.

With 15 victories among the 23 House races targeted, Republicans won control, were able to elect Tom Craddick as speaker and pushed a congressional redistricting plan that toppled the last bastion of Democratic strength in Texas.

Under the newly drawn map, six Democratic U.S. House members were unseated this year, giving the GOP a majority in the state's congressional delegation.

The Thursday agreement to dismiss charges against Diversified Collection outlined that the company made one contribution $50,000 on June 7, 2002 based on "false and misleading information provided by the fund-raiser that solicited the contribution."

It also points out the company would suffer, possibly losing federal contracts and leading to company layoffs, if the prosecution continued.

Part of the agreement, in keeping with District Attorney Ronnie Earle's frequent critique that large infusions of corporate money corrupts the political process, states: "Defendant further acknowledges that the basis for the Texas prohibition against corporate contributions is that they constitute a genuine threat to democracy."

Special prosecutor Gregg Cox said that his office considers the settlement, "a major step forward, particularly the public education part."

He said details of how the educational program would work are still being discussed.

He declined to comment on whether other companies or defendants also were negotiating settlements. The seven other companies still charged are Questerra Corp.; Westar Energy Inc; Sears, Roebuck & Co.; The Williams Companies Inc.; Bacardi USA; Cracker Barrel Old Country Store and The Alliance for Quality Nursing Home Care Corp.

Jon Shaver, vice president of Diversified Collections, said he and the company are pleased with the settlement.

Much of what was agreed to is now standing company policy, he said. The firm changed hands in January 2004 and no longer makes political contributions, he said.

"We think our civic contribution will be in the area of increasing public understanding in the area of corporations in American political life," Mr. Shaver said.

Craig McDonald, executive director of campaign reform group Texans for Public Justice, said he thought the settlement was a strong step forward and "a welcomed admission of wrongdoing."