ALEC Tied to British Political Scandal
British Conservative Party defense secretary Liam Fox is in the
midst of scandal that has grown deeper as ties to the American
Legislative Exchange Council (ALEC) are revealed. Pressure has been
growing on Fox in recent weeks after having been caught in a lie about
unethical dealings with his friend and former flatmate, and more ethical
problems arising from the operation of a recently-dissolved,
ALEC-connected “charity” Fox founded.
Improper Dealings, Friend Given Inappropriate Access
In June, a businessman had a private meeting with Fox in a Dubai
hotel to ask the defense minister to put pressure on United States
corporation 3M regarding a $41 million dispute over technology sales.
Fox initially claimed the meeting was a chance encounter, but The Guardian revealed that
the get-together was organized by Adam Werrity, Fox’s longtime friend
and the best man at his wedding. A lobbying firm linked to Werrity also received payment for his fixing the meeting.
Werrity was not a
public employee and had no security clearances, but had been handing out
business cards embossed with Parliament’s logo that described him as an
“adviser” to Fox. Other evidence suggests Werrity had an inappropriate
level of access to British government affairs. He accompanied Fox to meetings with
overseas dignitaries like the president of Sri Lanka, and met with Fox
multiple times in the defense secretary’s offices. Werrity has
unofficially been at his friend’s side throughout Fox’s career, taking
director positions at companies in the health industry when Fox was
health secretary for the minority party, and moving to the defense
industry when Fox became defense secretary.
British newspapers have been closely tracking allegations that
Werrity has been profiting off access to Fox, his friend and former
flatmate. According to The Guardian,
concerns about these types of conflicts-of-interests are “why special
advisers now have to be vetted, why they must observe their own code,
and why there is a compulsory register of their interests – these are
part of the machinery of good governance about which this government is
beginning to look casual.” Having an “off-the-books” advisor like
Werrity, The Guardian writes, “deprives officials of their essential role as guarantors of the public interest.”
Fox had been a star of Britain’s Conservative Party, and like ALEC-connected Republicans in the United States, he attacked public
employees earlier this year, responding to budget woes by cutting
unionized civil service jobs. But the Werrity scandals could be his downfall. Even the Rupert Murdoch-owned tabloid The Sun said the arrangement with Werrity “oozes access-and-influence” and called for Fox’s ouster.
Fox Founded ALEC-Connected Group, Headquarted in Public Office
As the Fox-Werrity scandal unfolded, it emerged that
Werrity had been using Fox’s taxpayer-funded office in the MPs’ block
at Portcullis House as the official headquarters of a supposed charity
called “Atlantic Bridge.” Fox had founded Atlantic Bridge in 1997 to
promote the “Special Relationship” between the United States and the
United Kingdom, and named Werrity its Executive Director. Fox stepped
down as a trustee in May 2010 when he became defense secretary. In 2001, the American Legislative Exchange Council (ALEC) set up a sister charity by the same name, reportedly offered
benefits to those donating to the British charity, and directly funded
Fox’s Atlantic Bridge with at least $44,000 USD (£28,528 British pounds)
in the past four years.
In a press release,
ALEC described the project as aiming to “foster positive relationships
between conservatives on both sides of the Atlantic, so that they may
further the ideals exemplified by Ronald Reagan and Margaret Thatcher,”
which some have
called an effort to “import U.S.-style conservatism to the U.K.” When
the project was announced in 2007, ALEC stated that it had 27 European
Parliament members “and expects to increase that number substantially
through the project.” It is unknown how many European politicians are
currently ALEC members.
The organization’s advisory council as of 2010 consists of Sen. Jon
Kyl (R-AZ), Rep. John Campbell (R-CA), Sen. Lindsey Graham (R-SC),
former Rep. Adam Putnam (R-FL until 2011), Sen. Joe Lieberman (I-CT),
and Sen James Inhofe (R-OK). All but Kyl and Lieberman are known ALEC
alums.
Atlantic Bridge Dissolves in Midst of Scandal
Atlantic Bridge closed its doors on September 31 in the midst of the Fox scandal, and just before The Guardian revealed Werrity had been running the charity from Fox’s taxpayer-funded offices. Last year, the British Charity Commission cited Atlantic
Bridge for “promoting a political policy [that] is closely associated
with the Conservative Party” rather than advancing its charitable
purposes. Atlantic Bridge agreed to conduct a review over the following
year and report back to the Commission.
One event noted in the Commission report was a 2009 fundraiser to present the “Margaret Thatcher Medal of Freedom” award to Henry Kissinger,
where VIP attendees paid $1000 USD (£700) and the rest paid
$600 (£400). The donations were used to advance the interests of the
Conservative Party, but were tax-free. Sen. Kyl attended the event and received reimbursement for his business class flight to London and stay in a $1250-per-night hotel room.
The Commission concluded that Atlantic Bridge’s stated purposes, to
conduct research and public education on U.K.- U.S. relations, met the
British definition of “charitable,” but in practice, the organization
had actually been advancing partisan political ends. Atlantic Bridge
stayed together for another year but dissolved as Fox and Werrity’s
political troubles multiplied.
Inquiry Into Charitable Status Mirrors U.S. Effort
In July, Common Cause requested that
the U.S. Internal Revenue Service conduct a similar inquiry into ALEC
for possibly violating its status as a tax-exempt “social welfare”
charity under U.S. tax law. As a non-profit organized under section
501(c)(3) of the tax code, “no substantial part” of ALEC’s activities
can be spent on lobbying, which Common Cause alleges ALEC violates by
drafting and affirmatively promoting corporate-sponsored “model
legislation.” The letter to the IRS concludes:
“By claiming to be a charity and calling participating legislators
“members” ALEC attempts to evade disclosure of its lobbying, allows
corporate members to deduct their payments as charitable contributions
rather than non-deductible lobbying expenses, and does an end-run around
state ethics laws intended to restrict the ability of businesses to buy
access to legislators in order to promote their policy agendas. The IRS
should stop allowing the continuation of this charade.”
Like Common Cause, British newspapers reporting on the Fox scandal have called ALEC “a major U.S. lobbying organisation for big corporations.” The Guardian cites
Fox’s connection to the organization as a potential liability based on
ALEC’s climate change denial, anti-environmental stance, and opposition
to public healthcare.
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