A Bug in Windows GOP

Microsoft is ending its relationship with choirboy-lobbyist Ralph Reed, but the company's ties to others in the seemingly infinite loop of the Republican lobbying scandal are deep—in D.C. and Seattle.

Ralph Reed: Microsoft's $20,000-a-month man—until now.

When it was recently revealed that Microsoft had employed religious conservative Ralph Reed as a political consultant, it was logical to wonder if his $20,000 monthly retainer was somehow related to the company’s temporary refusal to support a gay-rights bill in Olympia, which failed. Maybe the fiercely antigay crusader with the choirboy looks would be there to guide Bill Gates through a nationwide boycott of software products, as threatened by Eastside minister Ken Hutcherson.

But as Jon Stewart put it on The Daily Show: Microsoft? “Afraid of a boycott? And you call yourself a heartless monopoly!” Indeed, the company has since thumbed its nose at Hutcherson and promises to support future gay-rights legislation. It also still heartlessly rules the computer desktop.

And as for Reed, if he ever had anything to do with Microsoft’s role, or lack thereof, in this state’s gay-rights debate, he won’t next time. He’s being deleted from the Redmond software giant’s payroll, and he likely gets his last $20,000 check this month. (Seattle Weekly first reported this fact Thursday, May 26, on the Web, citing two unnamed Microsoft sources. The company initially would not confirm Reed’s termination, but after inquiries by other media, company spokesperson Ginny Terzano conceded his firm was “no longer on retainer.”)

One company source notes that Reed was on retainer while helping run the George W. Bush presidential campaigns of 2000 and 2004, raising ethical questions. But Reed now has gone a step further and filed to run for public office himself—lieutenant governor of Georgia, thought to be a step toward an eventual White House run. Having a political candidate on the payroll would be a clear ethical conflict for Microsoft. Reed, who did not respond to repeated requests for comment, was on retainer with Microsoft for seven years after quitting his leadership position at the Christian Coalition and launching a private consulting firm in Atlanta.

But there’s another potential cause of his deletion from Outlook address books at Microsoft: Reed is now caught up in the influence-peddling scandal in D.C., which includes accusations he worked in concert with two other top Republicans also once engaged by Microsoft. One of them, Jack Abramoff, lobbied for Microsoft in the late 1990s while a member of the Seattle law and lobbying firm Preston Gates Ellis—the firm of Microsoft Chairman Bill Gates’ father, William H. Gates II. Abramoff is under investigation for possibly bilking millions of dollars from former Indian tribal clients and improperly using his friendship with House Speaker Tom DeLay, who is facing ethics charges and is the subject of federal investigations. (See “Following the Money,” April 6.) Abramoff’s questioned activities include a suspected money-laundering scheme that involves both Reed and fellow Microsoft adviser and lobbying superstar Grover Norquist, head of Americans for Tax Reform.

Microsoft has played no known role in the scandal. But the GOP trio, all major fund-raisers and supporters of President Bush, have been some of the company’s biggest hired D.C. guns, instrumental in helping Microsoft reach out to the political right the past seven years.

As widely reported, the three operatives go way back. They met during the 1980s as leaders of the College Republicans. Norquist was Abramoff’s campaign manager in a successful election as chair of the national campus organization. Later, Reed led the group. Abramoff, a self-described ultraconservative Orthodox Jew, and Norquist began ascending with the 1994 Republican revolution in Congress. They launched what was called the K Street Project to persuade lobbying firms to increase their Republican connections; Abramoff lived across the street from a Preston Gates partner, who quickly hired him. Norquist, a close ally of former House Speaker Newt Gingrich of Georgia, that year helped draw up the GOP’s (ultimately voided) “Contract With America.” Reed, meanwhile, became a Bush campaign official and private consultant after leaving the Christian Coalition in 1996, which had risen from the ashes of evangelical Pat Robertson’s failed 1988 presidential bid.

Norquist also worked with Abramoff to lobby for the sweatshop industry in the Northern Marianas, a Preston Gates Ellis client, according to a report in The New York Times last week. That work is a target of several investigations. Senate investigators also want to know about the roles of Reed and Norquist in an alleged 1999–2001 scheme by Abramoff to funnel Indian casino gambling money through Norquist’s organization to pay for an anti-gambling campaign run by Reed in Alabama. According to Senate testimony and reports in The Boston Globe and the Atlanta Journal-Constitution, Norquist confirms he passed the money to Reed. Reed, who says gambling is a sin, thought the money came from tribal industries, he says, not casino operations. Reed and Abramoff have turned over some records to Senate probers while Norquist’s documents had to be subpoenaed.

Their names show up in a virtual Rolodex of conservatives tied to money and faith-based politics across the U.S. and locally. Reed, for example, was replaced at the Christian Coalition by Randy Tate, the former Washington 9th District Republican congressman who served as deputy whip to DeLay. Norquist praised Tate, saying the onetime state legislator from Auburn—first elected after suggesting his opponent was a child molester—”understands the way politics works. . . . ” Then there’s the ubiquitous Mercer Island rabbi, Daniel Lapin. The conservative Seattle talk-radio host introduced DeLay to Abramoff in the 1990s, joined Reed in Christian/Jewish alliances dating to 1994, and is on the advisory board of, among other groups, the Ronald Reagan Legacy Project, established to build monuments to the Gipper. Fellow members included DeLay, former Attorney General John Ashcroft, Bush brain Karl Rove, and chair Norquist. A month ago, according to Washington Jewish Week, after Norquist was married, Lapin had the honor of introducing the tax fighter and his new wife to the reception audience—which included pal Abramoff. Lapin was also a vocal critic of Microsoft’s gay-rights stance, supporting his fellow talk-show host and homophobe Hutcherson of Antioch Bible Church in Redmond.

Microsoft sees no ethical conflicts in paying for the services, current and past, of Norquist and Reed and the earlier efforts of Abramoff, who, in e-mails obtained by probers, referred to some of his Preston Gates Ellis clients as morons, monkeys, and idiots. Once a political neophyte, Microsoft is now a D.C. power player, having spent almost $60 million since 1998 to legally purchase access and influence. Though the younger Gates and CEO Steve Ballmer last year each gave the Bush campaign $2,000 (and John Kerry nothing), and the company’s political action committee gave 54 percent of its donations to Republicans ($5,000 to Bush, nothing to Kerry), the company says it backs candidates regardless of party. “Our philosophy,” says spokesperson Terzano, “is that we support organizations that benefit the company and the tech industry overall.”

With all the burnable dollars of Microsoft and Gates, money is bound to show up when and where it might be beneficial. In 2003–04, Microsoft’s PAC gave Tom DeLay a $10,000 campaign donation, and Ballmer added $2,000, while, IRS records show, the Bill and Melinda Gates Foundation gave DeLay’s Foundation for Kids $100,000. Just coincidence, say the company and the foundation.

It was no coincidence, however, that Microsoft twice engaged Reed while he was helping direct the Bush campaigns. In 2000, Microsoft engaged Reed’s firm to push for settlement of its landmark antitrust lawsuit. Reed urged supporters to write his candidate, Bush, in support of his client, Microsoft. Reed later apologized for any “misperception” about this duality. Reed was retained again last year, prior to the 2004 election, in which he played a major role as Southeast regional campaign coordinator for Bush. Microsoft will not explain his 2004 assignment for the company other than to say he served as an adviser on trade and competition.

As for lobbyist Abramoff, “He did a relatively small amount of work for the company from 1995 through 1996,” says Terzano. “His involvement was sporadic, if you will, over a relatively short period of time.” Senate reports show Microsoft paid Preston Gates lobbyists $800,000 in 1998–99, the period during which Abramoff worked on behalf of the software retailer. Abramoff and others made contacts with the GOP-controlled Congress, the Justice Department, and the Clinton White House prior to the antitrust settlement.

Norquist, meanwhile, was racking up $220,000 in 1997–98 lobbying for Microsoft, according to Senate records. Among his listed assignments was providing “strategic advice.” Mother Jones magazine in 1998 said Norquist “placed the company’s issues on the national conservative agenda and helped rally groups such as the Christian Coalition and the National Rifle Association around Microsoft’s causes.” The company won’t say how much it pays for any services by Norquist, who wants to privatize government, shrinking it to where he can “drown it in the bathtub.” Says Terzano: “He is not a paid consultant. We support his organization through a membership fee.”

In 2000, with Abramoff, Reed, Norquist, and lobbyists such as former Republican Party chief Haley Barbour helping out, Microsoft spent $10.5 million on federal lobbying and campaign donations. In 2004, it was almost $19 million. Then-candidate Bush might have noticed. Eleven months after he took office, Microsoft’s five-year-old antitrust case was effectively settled. Life got only better for Microsoft afterward. In 2003, it issued its first-ever dividend to shareholders—Bill Gates got $99.5 million—just a week after Bush proposed the repeal of a tax on dividends. The repeal was later approved, cutting the 35 percent tax rate to 15 percent. Microsoft chief financial officer John Connors—who, along with Microsoft head lobbyist John Kelly, are top Bush fund-raisers—said the repeal was just coincidence. The following year, Microsoft issued a boggling dividend of $32 billion to shareholders. Gates got $3.5 billion. Thanks to the Bush tax cut, he pocketed an extra $700 million.

Again, just politics. “We’re very much a company,” says spokesperson Terzano, “that learns quick and looks toward the future.” Of course, it doesn’t hurt a heartless monopoly to have the faith-based folks in power praying for you.


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