WORLD

The price of influence

Congress investigates a housing scandal

HILARY MACKENZIE July 10 1989
WORLD

The price of influence

Congress investigates a housing scandal

HILARY MACKENZIE July 10 1989

The price of influence

Congress investigates a housing scandal

THE UNITED STATES

Outside, it was another stiflingly humid Washington day. And inside the second-floor hearing room last week, the temperature rose steadily as eight congressmen—members of the House employment and housing subcommittee—testily accused the witness of flagrant influence-peddling. Frederick Bush, no relation but a former deputy chief of staff for then-Vice-President George Bush, struggled to fight the charge that his small lobbying firm had traded on his political ties to obtain contracts for its clients from the department of housing and urban development (HUD) in the mid-1980s. “This is a case of cashing in on political influence,” declared Representative Barney Frank, a Massachusetts Democrat. It is also a case of enormous proportions. Frederick Bush was one of many prominent Republicans accused in recent weeks of abusing HUD, an agency that is supposed to aid lowincome Americans but, during the eight-year Reagan administration, was clearly used as a profit-maker for the well-connected. And as congressional hearings proceed, the HUD affair has developed into a serious embarrassment for the Republicans and another example of government corruption in scandal-plagued Washington.

The HUD controversy is a result of human

greed and government mismanagement. It is unfolding not only at the congressional inquiry, but also in a justice department investigation into where millions of HUD dollars—some sources say as much as $100 million—were spent. And it features such big-name Republicans as former interior secretary James Watt and such previously obscure figures as Marilyn Harrell, a misguided escrow agent who earned the nickname “Robin HUD” after admitting to stealing millions in department funds and giving them to the poor. But the key character is Samuel Pierce, 66, the HUD secretary during the Reagan years and the only black member of the former president’s cabinet.

Widely known as “Silent Sam” for keeping an exceedingly low profile—Reagan himself once mistakenly addressed him as “Mr. Mayor”—Pierce, by all accounts, paid little attention to the scandal brewing around him. In his own defence, he has laid the blame on members of his staff. Tom Lantos, a California Democrat who chairs the subcommittee investigating the scandal, last week compared Pierce to “the Maytag repairman, sitting in his office with little to fix, waiting for the phone to ring, for someone to tell him that some of the HUD programs were out of order and needed major repairs.” Added Laníos: “According lo Mr. Pierce, Ihis phone never rang.”

The irregularities aí HUD became public lasl April in an 800-page report prepared by Paul Adams, Ihe departments inspector general. Adams said Iasi week lhai agency officials had largely ignored his earlier reports of problems in federal housing programs, beginning in 1985. The April documenl sparked Ihe House subcommittee to open hearings into Ihe affair in May— and revealed a nationwide series of scams.

In Ihe quiel Long Island communily of Island Park, N.Y., for one, ranch and Cape Cod-slyle homes—built under a federally subsidized program designed to provide affordable ($47,000 to $72,000) housing for the poor—were given instead to such well-connected people as Anthony Ciccimarro, a cousin of Senator Alfonse D’Amato, a New York Republican. Of the 44 houses built with HUD money, 12 have since resold—one for $321,000. In a terse statement from his office, D’Amato denied that there had been any favoritism in the selection of the residents.

“There is no reason to believe anything was inappropriate,” the senator said.

Pierce has blamed most political favoritism in the department on Deborah Gore Dean, a former Georgetown bartender who was his executive assistant. Dean, now 34, played a key role in handing out millions of dollars in lowincome rent subsidies and in awarding contracts to influential Republicans. Among those who received lucrative fees was former interior secretary Watt, who lobbied successfully for funding of a housing project in Essex, Md.

In return for making eight telephone calls, Watt received a fee of $359,000.

Three weeks ago, Dean refused to testify before the subcommittee—pleading her Fifth Amendment right against self-incrimination— until her lawyers have examined volumes of HUD documents.

Some of the department’s funds were simply stolen. In a dramatic appearance before the subcommittee on June 16, Harrell—or “Robin HUD”—cried and cited passages from the Bible as she told the hushed audience how easy it was to take $6.6 million from the proceeds of sales of houses foreclosed by HUD, which guarantees the mortgages of some U.S. housing. A Maryland escrow agent on contract to HUD to handle such foreclosures, Harrell said she took advantage of the chaos at the agency to siphon the money, first to cover her own debts and then to set up a charity—called Friends of the Fa-

ther—to help poor people, unwed mothers and ex-convicts. “I am not sorry what I did with the money,” Harrell told Maclean’s last week. “But I am sorry it wasn’t mine to give. I am a person who loves God. Perhaps the Lord loves me even though I was going about it in the wrong way.” The damage to the Republicans—and to the reputation of the Reagan administration—is hard to determine. In an administration committed to reducing social programs, Pierce presided over major cuts in HUD funding—to $18 billion last year from $42 billion in 1980. And Gerald McMurray, staff director of the

investigating the scandal, said: “When [Reagan administration officials] couldn’t destroy the programs, they made a killing off them. It is like a rape and pillage operation.” Added Thomas Mann, an analyst at the Brookings Institution, a Washington think-tank: “It is the utter cynicism that was displayed by the Reagan administration. Their attitude was ‘Who gives a damn?’ ” Looking ahead to the 1990 congressional elections, some experts predict that the scandal will prevent the Republicans from capitalizing on the spate of ethical problems affecting House Democrats—particularly Jim Wright, who was forced to resign last month as House Speaker. “The Republicans tried to get a lock on clean government and paint the Democrats with a black brush,” said Brookings scholar Stephen Hess. “No party has a lock on corruption and honesty.” President Bush tried to de-

fuse the issue at a news conference last week. He dedared, “We are going to do everything we can to clean up any cronyism and see that

matters of that nature do not recur.” And current HUD Secretary Jack Kemp, a 53-yearold former football hero and nine-term Buffalo congressman, also vowed to mop up the agency’s mess. Last week he toured the urinesoaked halls and rat-infested rooms of a HUD project: a privately owned, federally subsidized housing development in Washington. Kemp called conditions at the 301-unit apartment building “scandalous,” and, wincing at the litter-strewn playground and the adjacent parking lot where drug merchants openly deal, he added, “There were no controls, there were no standards, there was no follow-up, and that day is over.” For a troubled agency, the fulfilment of that promise would mark a major change.

HILARY MACKENZIE