Citizens for Political Reform
PO Box 408 * Peabody, MA 01960
Phone: (508) 538-3900 * Fax: (508) 531-4374 * E-Mail: CPR98@aol.com
Visit our web-page at: http://cltg.org
-------------------------------------------------------------------

Greeting folks;

This was sent in from a supporter and I thought it was an important insight into the campaign finance corruption that has now infiltrated even Massachusetts political campaigns. I'm passing it on for your information.

Note especially the comment by Rep. Joan Menard (who drives a Mercedes leased by her campaign committee), state Democratic Party chairwoman:

"We do not know exactly" who gave the soft money that wound up in the state party coffers, she said, but "all the money we took in was absolutely legal."

She should know. It was she who slipped through the change in the campaign finance law in 1994 that now *makes* it legal!

Chip Ford --


Boston Sunday Globe
April 13, 1997

Soft money aided Mass. Democrats:
DNC funds dodged state curbs

By Michael Kranish
Globe Staff

WASHINGTON - A state-regulated account of the Massachusetts Democratic Party received the vast majority of its funds during the last two years from unregulated "soft money" contributions collected by the national party, according to federal and state records.

The money poured into the party from Washington only after state Democrats inserted an obscure provision in a Massachusetts law passed in 1994 that allows the political parties to receive national soft money for their "state accounts," thus legally circumventing a longstanding ban on contributions of more than $5,000 per person annually.

Massachusetts Republicans collected far less soft money and, unlike the Democrats, have disclosed the original source of every dollar. This has created the biggest financial disparity between the two parties in the last three years, Republicans said last week. Soft money consists of unlimited and unregulated contributions to the national political party. It is controversial because donations to candidates and state parties are strictly regulated and limited.

Paul Fitzgerald, director of the Massachusetts office of the reform group Common Cause, said the flow of soft money into the Massachusetts Democratic Party account amounted to "laundered money that got around the system."

"Soft money is the biggest scandal, and now we see it is happening in Massachusetts," Fitzgerald said, although he acknowledged the legal loophole.

The use of federal soft money by the state Democratic Party brings the ongoing national controversy over fund-raising directly to Massachusetts. Nationally, the issue has centered on who gave the soft money, with the Democratic Party returning more than $3 million in contributions because of questions about the source of the funds. But the question of how the money was distributed to certain state parties has received little notice.

In the last two years, $1.4 million of the $1.7 million of the "state account" budget of the Massachusetts Democratic Party came from soft money transfers from the national party, according to a Globe examination of federal and state records. Those funds were used for salaries, administrative expenses, voter-registration campaigns and party-building activities.

Cheryl Cronin, general counsel for the Massachusetts Democratic Party, said she "does not dispute" that most of the money in the state account came from the Democratic National Committee. But she stressed it was specifically authorized in the 1994 law.

Joan M. Menard, the Massachusetts Democratic Party chairwoman and a state representative, played a key role in 1994 in inserting the provision that allowed the transfers. "We do not know exactly" who gave the soft money that wound up in the state party coffers, she said, but "all the money we took in was absolutely legal."

Governor William F. Weld apparently sought to keep the provision out of the law in 1994 but vetoed the wrong section of the measure.

The state account is subject to state regulation. It is separate from the state party's federal account, which is entirely funded with "hard money" from the national party and is subject to federal regulation. There are limits on how much hard money can by donated by an individual or political action committee, and a list of donations is fully disclosed.

While Democrats were reaping huge benefits from the flow of soft money, Republicans did not take similar advantage of the legal provision. The Massachusetts Republican Party took $363,000 from the national party's soft-money account, but the GOP considered the money as if it were regulated hard money, thus severely limiting its intake.

That left Republicans at a $1 million disadvantage in the last campaign and played a role in the defeat of GOP candidates, including Weld's effort to unseat Senator John F. Kerry, according to Bill Vernon, former executive director of the Massachusetts Republican Party.

"It was a loophole, and the Democrats took advantage of it," Vernon said last week. "Historically, soft money has been kept out of Massachusetts, and I happen to think that is a good idea."

Since the Republicans now realize how Democrats have used the national soft money, they are likely to begin tapping national GOP funds in the same way, party officials said.

Under a longstanding Massachusetts law, state parties cannot collect money from corporations, and state law also bans contributions greater than $5,000 annually from individuals or political action committees.

However, in 1994, Democrats, led by Menard, arranged for a provision to be inserted into the law that allowed national parties to transfer money to state parties to pay for everything from salaries to "party building" activities. The provision says such transfers are not "contributions" to the party and thereby not subject to state regulation.

As a result, corporate money and unlimited contributions from unions and individuals can flow into the parties in Massachusetts if the funds are funneled through the national parties.

In other words, it is possible that a corporate official who is prohibited from giving more than $5,000 directly to the state party could have donated as much as he or she wants to the national party. The national party then could transfer the money to the state.

While federal records do not indicate that any corporate soft money went to the Massachusetts Democratic Party, the records do show large transfers of money from labor groups and unnamed individuals. Many of the transfers ranged from $25,000 to $40,000.

Ironically, state officials said Weld tried to veto the 1994 provision that allowed the transfer of soft money. Weld wrote in his Sept. 1, 1994, veto message that the measure would "in effect retroactively authorize receipt of `soft money' from national parties for this fall's state election campaigns. This seems inadvisable."

But according to Brad Balzer, deputy director of the state's Office of Campaign and Political Finance, the measure became law because of a "clerical error" during the attempted veto.

"Weld vetoed section 73 when he meant to veto section 72," Weld spokesman Rob Gray said.

During the next two months, Democrats arranged for a $500,000 transfer of soft money in the closing days of the 1994 campaign, which Republicans believe freed up money the Democrats were able to use to help reelect Senator Edward M. Kennedy.

Vernon, the former Republican Party director, said he had no idea at the time that the $500,000 transfer occurred, and he now believes it made a difference in Kennedy's victory.

While Massachusetts officials profess pride in requiring full disclosure of all contributions to candidates and political parties, the direct contributors of the soft money in this case are not disclosed. All that is known are the names of all soft money donors nationally. As a result, there is a record of who financed the state's Republican Party but there is no similar file showing who provided the money collected at the national level that was transferred to the Massachusetts Democratic Party.

When Democratic officials were first asked about the matter last week, they said the state deserved large transfers of national soft money because of President Clinton's success in raising money in Massachusetts. However, it would be illegal for the DNC to "earmark" funds collected at Clinton's fund-raisers in Boston for use by state party officials. Asked about this, Massachusetts Democratic officials said no contributions were "earmarked" for return to the Bay State.

* * *