K Street Mulls Jack Factor

But while lobbyists are wearing their best game face in public, in private ethics lawyers say they are fielding a raft of calls from K Streeters anxious to make sure they don’t somehow wind up in the cross hairs of federal prosecutors.

“Every conversation I’ve had with a lobbyist in the last several days is one of great concern,” says Kenneth Gross, an ethics expert at Skadden, Arps, Slate, Meagher & Flom. “Folks [aren't] waiting to get a call from [the Justice Department]. But without any enforcement going on out there, other than the specter of a newspaper story, some [lobby shops] may not be implementing compliance programs in the way they should.”

CALLS FOR REFORM

With the House and the Senate both out of session last week, it is still unclear how the Abramoff plea — and the outrage surrounding it — will affect the business of lobbying on the Hill. Lobbyists say they’re not overly concerned, but there’s been talk in some Hill offices of banning entertainment paid for by lobbyists. Lobbyists should get a clearer read on lawmaker sentiment soon, as the February deadline for appropriations requests in the 2007 budget is fast approaching and Judge Samuel Alito Jr.’s Supreme Court confirmation hearings begin next week, providing a very public stage.

Right now the mantra on K Street is proceed with caution. But don’t expect members of Congress to want to be seen in public with you — at least until the furor dies down or reforms are enacted. “People who get their fingers burned try to be careful around the fire,” says one trade association lobbyist.

Lawmakers have been proffering a wide variety of lobbying reforms, including provisions that would ban former members of Congress from using their access to the House or Senate floor to lobby, extend the one-year lobbying ban for committee staff, and increase reporting and disclosure requirements.

Wisconsin Rep. David Obey, the top Democrat on the House Appropriations Committee, has gone so far as to call for the elimination of earmarks in spending bills to obtain votes and to prohibit additions to conference reports without a public vote.

“I’m worried,” says one prominent D.C. lobbyist who has already had some conversations with congressional members about what shape lobbying reform may take. “Everyone is going to try to one-up each other [with various legislation] and start to villainize lobbyists.”

That possibility is exactly what rattles many on K Street. For years, lobbying regulations have been enforced laxly, if at all, leaving few in the profession aware of exactly just where the line is drawn and how they can avoid winding up on the wrong side of it.

Not that many believe lobbying reforms would fundamentally alter the reality of influence-brokering in Washington politics: “People like Abramoff are going to take any law that is passed and ignore it or work around it,” says Gregory Rohde of technology lobby shop e-Copernicus.

Should any legislative drive materialize to make over current lobbying regulations, observers say that Sen. John McCain (R-Ariz.) has a leg up with his comprehensive reform bill. And while his proposals are, by and large, palatable to most in the industry, there are still provisions that make many lobbyists squirm, most notably requirements that lobbyists record fund-raising activities on their lobbying reports and disclose any gifts to staffers valued at $20 or more.

But the proposed McCain reforms may be overshadowed. Last week, Senate Majority Leader Bill Frist (R-Tenn.), who wants to see a bill that would overhaul lobbying by March, placed Sen. Rick Santorum (R-Pa.) in charge of formulating leadership-approved legislation. It’s an interesting choice, given that Santorum was a part of the infamous K Street Project spearheaded by Abramoff and is likely to be hammered over his connections to the disgraced lobbyist during his Senate re-election bid this year.

Meanwhile, the American League of Lobbyists has held meetings with Sens. McCain and Russ Feingold (D-Wis.) and Rep. Rahm Emanuel (D-Ill.) on their reform proposals. League President Paul Miller says he’s trying to distance the profession from Abramoff’s activities, but that the focus should be on enforcement of existing laws, rather than on new rules. “My hope is that Congress does not rush to judgment,” says Miller. “Look at the current Lobbying Disclosure Act and see if it’s working.”

But in the wake of the Abramoff plea, many senators aren’t interested in waiting for proposed legislation and are moving to enact office rules banning staff lunches paid for by lobbyists, says one longtime Republican lobbyist.

PART OF THE FIRMAMENT

Such piecemeal measures, lobbyists say, aren’t going to change the way business in Washington is done, especially for entrenched lobbyists with thick Rolodexes.

It’s a culture that isn’t confined to a handful of power brokers at the Palm. Lobbying is no longer a business for just Fortune 500 companies. As of 2005, there were almost 14,000 people paid to lobby Congress, the White House, and other government officials, according to lobby watchdog group the Center for Public Integrity.

Lobbyists say that, at least right now, they aren’t worried about losing clients or about an “Abramoff effect” hurting the bottom line. “People who haven’t been lobbying long, who don’t have the relationships, or are coming from [a company's] headquarters are going to have a harder time leveling suspicion,” says one lobbyist, a former Bush administration official. “But if you’re a lobbyist in this town, well respected on both sides of the aisle, and your word is good, I don’t see it as really affecting your ability to lobby.”

One aspect of the Abramoff charges that is sparking conversation on K Street, if not outright consternation, is the somewhat unorthodox bribery charge outlined by the Justice Department. In Abramoff’s plea deal, he admitted to providing, among other things, $14,000 in campaign contributions both to Rep. Bob Ney (R-Ohio) and (at Ney’s urging) to the National Republican Campaign Committee. In his plea, Abramoff stated that the payments were provided “in exchange for a series of official acts of influence.” But there is no explicit connection made in the plea between the contributions and the alleged official actions.

That lack of an explicit quid pro quo has left many on K Street worried that campaign contributions to sympathetic lawmakers may now possibly be construed as illegal bribes. That, to put it mildly, would represent a fundamental threat to Washington’s usual modus operandi. “It seems to suggest that you potentially have an illegal act if there is a campaign contribution or other gift that is close in time to an official act,” says Ronald Platt, a lobbyist who worked with Abramoff at Greenberg Traurig before leaving to head Buchanan Ingersoll’s lobby practice.

Donald Tobin, a former Justice Department tax lawyer and campaign finance professor at Ohio State University’s Moritz College of Law, is skeptical. “They’ve got to do better than that,” he says. “It can’t just be, �I’ve given a contribution to someone who’s like-minded and that somehow is bribery.’ “

In some ways the Abramoff controversy echoes the last major lobbying scandal to rock Washington, a quarter-century ago. In 1980, six members of the House were caught on tape taking stacks of cash from FBI agents disguised as Arab sheiks. But while the “Abscam” sting generated headlines and calls for reform, even its shocking surveillance tapes and suitcases full of cash failed to alter the basic reality of lobbying in the Capitol. And, in fact, the Lobbying Disclosure Act wasn’t passed until 1995.

Most lobbyists predict the scandal will generate some kind of reform, especially given that the 2006 midterm elections are just around the corner. Some even equate it with the wave of controversy that enveloped corporate America a little more than three years ago.

“Abramoff is our industry’s Enron,” says a former George H.W. Bush administration official and Republican lobbyist.

The sudden falls of Kenneth Lay, Bernard Ebbers, Dennis Kozlowski, and other corporate mandarins present an interesting parallel with Abramoff. In some ways it’s easy to see how the excesses of D.C.’s swag circuit, once exposed to the light, could result in far-reaching reforms similar to the Sarbanes-Oxley legislation that followed the Enron scandal.

Then again, many of the wide-ranging reforms discussed in the wake of Enron’s collapse never came to pass, as the accounting fraud and disclosure problems were increasingly attributed to the acts of a few bad apples. Early indications are the lobbying world is reading from the same script.

As Tobin puts it: “I’m not sure that Enron showed us that [corruption] was widespread, but that there were a number of people who could push the envelope. The same is probably true in the lobbying world.”

A real indicator of whether a sea change is in the offing might come in the form of porterhouse orders at the Palm. But Tommy Jacomo, the restaurant’s general manager, isn’t worried.

“The buzz around town has been incredible,” says Jacomo, who has worked at the Palm for more than 30 years. “Controversy always helps business, starting from Watergate right up to today.”