Downfall of 'The Acid Rainmaker’

MARCI McDONALD March 30 1987

Downfall of 'The Acid Rainmaker’

MARCI McDONALD March 30 1987

Downfall of 'The Acid Rainmaker’


His vast luxury office suite over-looking Georgetown harbor now stands half empty—a reminder of the $3.9 million in corporate and foreign-government contracts he has lost within the past year. Former White House colleagues no longer return his telephone calls. And old friends taking up a collection to help Michael Deaver pay more than $650,000 in legal fees have discovered that potential donors, who once curried his favor, no longer want their names linked to his. Then, last week, a federal grand jury in Washington dealt Deaver, once the capital’s most powerful lobbyist, a crushing new blow. The grand jury indicted the former White House deputy chief of staff on five counts of perjury resulting from his lobbying contacts with more than a dozen top administration officials.

The action against Deaver, a 20-year friend of Nancy and Ronald Reagan, arose after Supreme Court Chief Justice William Rehnquist dismissed Deaver’s third attempt to block legal action against him. One of the key charges against him is that he lied under oath last June about his efforts to win concessions on acid rain for the Canadian government while he was still working in the White House. Only six months after that alleged intervention Deaver, having set himself up as a lobbyist, acccepted a $135,000-a-year contract to represent Canada’s interests in Washington.

If proven, the perjury indictments carry penalties of up to 25 years in prison—and if Deaver goes on trial, it could be an embarrassment for the Canadian government. Among those likely to be called to testify are at least two of the officials instrumental in hiring him as lobbyist: Prime Minister Brian Mulroney’s friend and adviser Fred Doucet and Canada’s ambassador to Washington, Allan Gotlieb. Although External Affairs officials have balked at setting the precedent of waiving diplomatic immunity if Gotlieb were to testify to the grand jury, they admitted last week that the ambassador had twice supplied

written answers to questions in the Deaver investigation which had provided the basis for one of the five counts of perjury. Indeed, some critics say that the case could tarnish the country’s image just as the administration prepares to present a Canada-U.S. free trade agreement to Congress for approval next fall. Demanded Liberal foreign affairs critic Lloyd Axworthy in Ottawa:

“You have both acid rain and free trade forcing Congress to ask some tough questions about Canada. If they felt there had been efforts in high places in the Canadian government to evade U.S. laws, it is not going to help.”

In fact, in response to the indictment against him, Deaver read a prepared statement pointing out that it “contained not a single conflict-of-interest charge.” Widespread allegations in Congress that he violated a 1978 law that prohibits officials from contacting their former government agencies on behalf of clients within a year of leaving office led to Deaver’s current troubles. A secretive nine-month investigation was conducted by court-appointed special prosecutor Whitney North Seymour. And when it became apparent three weeks ago that his investigation was about to result in an indictment,

Deaver’s lawyer, Herbert Miller, moved to prevent it by challenging the constitutionality of Seymour’s appointment.

The indictment charged that Deaver lied to a congressional subcommittee last May. At that time he denied setting up a 1985 meeting between Reagan and a Korean trade emissary while he was negotiating a $618,000 contract to represent South Korea. It also alleged that he

lied when he denied having pressed Transportation Secretary Elizabeth Dole to prevent a hostile takeover of another client, Trans World Airlines. The other perjury counts involved Deaver’s contacts on behalf of clients with a dozen top administration officials, including Secretary of State George Shultz. Those clients included such corporate giants as Philip Morris Inc., Rockwell International Corp. and Boeing Co.

The charge involving Canadian interests was related directly to the acid rain issue. The indictment alleges that Deaver improperly used his influence at the White House to orchestrate a compromise between opposing Canadian and U.S. positions in advance of the socalled Shamrock Summit between Reagan and Mulroney on March 17, 1985. Deaver told the grand jury that he did not recall any White House meeting on

acid rain until March 6—less than two weeks before the summit—nor any previous discussion of appointing two envoys to study the situation. But according to the indictment, he took part in at least six White House meetings on acid rain before that date and “actively supported” the envoy concept from the time it was first proposed on Dec. 17,1984.

The grand jury also charged that Deaver lied when he testified that he had no role in naming former transportation secretary Drew Lewis as the U.S. acid rain envoy. Not only did he support Lewis’s candidacy, the indictment stated, but—contrary to his claims—he personally spoke to Lewis on the day of his appointment. In addition, the investigation found that Deaver allegedly perjured himself in claiming that he did not recall lunching with Gotlieb in January, 1985. During that lunch, according to the indictment, Deaver told Gotlieb that he had discussed the envoy idea with Shultz, who had not objected.

Those alleged activities—which won Deaver the title “The Acid Rainmaker” in a series of damaging headlines last year—may in fact have led to his current problems. Following reports of his role in seeking U.S. action on acid rain, Democratic congressman John Dingell— a traditional opponent of environmental controls, whose constituents include Detroit’s automakers—called for an investigation of Deaver’s lobbying practices.

Last week’s indictment was issued on the same day the Reagan administration announced that it would press Congress to allocate $3.2 billion for research on combatting factory emissions that cause acid rain. Most observers said that the administration was trying to defuse the issue before an April 4-5 Reagan-Mulroney summit in Ottawa.

The indictments also coincided with Deaver’s increasingly active role in advising the President on how to rescue his shattered image in the wake of the Iran arms scandal. Afterward, the Reagans issued a statement saying that Deaver was “in our thoughts during these difficult times.”

Deaver himself has acknowledged that the outlook for his business is already dim. He has not sought to renew his contract with the Canadian government, and earlier this month his last foreign client, the kingdom of Saudi Arabia, terminated his $500,000-a-year services. But Canada may suffer more than most clients from its association with a lobbyist who has become synonymous with what critics describe as the Reagan administration’s “sleaze factor.” As one tongue-in-cheek lapel button currently circulating in Washington put it, “Leave it to Deaver: He came, he saw, he cashed in.”

— MARCI McDONALD in Washington