FLOOR STATEMENT OF SENATOR JOHN McCAIN ON EARMARKS AND CORRUPTION
July 23, 2009
Mr. President, I have long spoken about the broken appropriations process and the corruption it breeds. I remain deeply concerned over the damage done to our country and this venerable institution by their continued abuse. And, I ask my colleagues: how many more pay-to-play scandals will it take before we enact comprehensive and meaningful earmark reform?
Just look at the scandals in the last five years alone. Former U.S. Representative Randy Cunningham sits in a Federal penitentiary today for selling earmarks. Among the many bribes Cunningham admitted receiving were the sale of his house at an inflated price, the free use of a yacht, a used Rolls-Royce, antique furniture, Persian rugs, jewelry, and a $2,000 contribution for his daughter's college graduation party. In return, he earmarked untold millions of dollars and pressured the Department of Defense to award contracts to his co-conspirators.
Of course, Senator Dorgan and I spent nearly two years investigating the Indian lobbying practices of Jack Abramoff, who reportedly dubbed the appropriations committee a “favor factory.” One former Senate staffer pled guilty to accepting gifts in exchange for helping Mr. Abramoff’s team on appropriations matters. An ex-official in the Department of Justice pled guilty to accepting bribes for helping Mr. Abramoff’s client secure millions of dollars to build a jail. In all, over twenty people – including an ex-congressman, administration officials, congressional staffers, and lobbyists -- have been indicted, convicted, or pled guilty. The Department of Justice’s investigation into this matter still continues.
Now we have multiple pay-to-play scandals unfolding before our eyes. We read weekly, almost daily, news article after news article about numerous criminal investigations revolving around earmarks.
Take, for example, the ongoing criminal investigation into the PMA Group. Most Americans have probably never heard of the PMA Group. The PMA Group was a D.C. lobbying firm with deep ties to Capitol Hill and a reputation for securing lucrative earmarks for its clients, especially defense earmarks. It boasted more than $15 million in revenue last year. PMA Group clients reportedly received $300 million in defense earmarks for fiscal year 2008 and $317 million for fiscal year 2009. And, the PMA Group and its clients spread around a lot of campaign contributions in an attempt to curry favor with lawmakers.
Last November, the Federal Bureau of Investigations raided PMA’s offices and the home of its founder, Paul Magliocchetti. According to news reports, prosecutors were initially focused on whether Mr. Magliocchetti used a Florida wine steward and a golf club executive as a front to funnel illegal donations to lawmakers. The Washington Post examined campaign contributions reportedly given by employees of the PMA Group and found listed in donor records “several people who were not registered lobbyists and did not work for the lobbying firm,” including a 75-year-old California man who had never even heard of the firm.
Since then, the Department of Justice has raided the offices of a number of PMA clients and their business partners. A federal grand jury reportedly subpoenaed records from one U.S. Representative’s congressional and campaign offices, and the FBI is interviewing his staffers.
Last week, we read about yet another scandal involving people and firms in PMA’s orbit.
According to a July 15 Associated Press news article, the former head of the defense contractor Coherent Systems International pled guilty in federal court to defrauding the U.S. government and accepting kickbacks. Two former PMA clients are reportedly caught up in the scandal.
According to court documents, in October 2005, the Air Force Research Lab awarded Coherent an $8.1 million contract to deliver four Ground Mobile Gateway Systems. An $8.2 million earmark contained in a tsunami relief bill funded the contract. Not surprisingly, Coherent had lobbied for that earmark. At the time, Coherent was represented by a firm called KSA Consulting.
Coherent submitted to the government at least $1.8 million in purchase orders outside the scope of the Air Force contract. What did the government get for its $1.8 million? Coherent paid two subcontractors, which were also represented by KSA Consulting, almost $600,000 for software that was not called for under the Air Force contract. What did Coherent do with the software? It literally threw the software in a closet where it sat collecting dust.
Coherent paid another subcontractor $650,000 for the delivery of five prototypes, also not part of the prime contract. Some reports suggest that this is the same subcontractor that allegedly bribed Coherent’s president and whose offices the FBI raided earlier this year.
Coherent also paid Schaller Engineering, a former PMA client, $200,000 for technology that was never delivered. We now know where that money went. On July 21, 2009, Roll Call reported that the former Air Force contracting official on the Mobile Common Data Link Gateway program pled guilty “to skimming money from an earmark that was provided to a Pennsylvania defense contractor.” In his plea agreement, the official admits to approving invoices that were not part of the contract, and then taking the kickback from the defense contractor.
This is outrageous and, I believe, only the tip of the iceberg. We will undoubtedly see the continued march of news reports about further indictments and guilty pleas.
Mr. President, earmarks breed corruption, pure and simple. And, the current earmarking process does not stop it, or adequately guard against it. So I ask my colleagues, how many more scandals must we suffer before we enact meaningful earmark reform? How low must Congress’ approval ratings sink before we act to repair this institution’s reputation? How many more lawmakers, staffers, government officials and contractors must go to jail before we actually fix this process?
Unfortunately, Congress’s earmarking practices have grown worse, not better, just about every year I have served in the Senate. This year promises to be the worst. We began the year by passing a $410 billion omnibus appropriations bill with almost 9,000 earmarks in it. Contrary to his promise to the American people to stem the tide of earmarks, the President refused to veto that pork-laden bill. In fact, he signed it in a quiet room far from the public eye.
Two weeks ago, the Senate approved a $44 billion Department of Homeland Security appropriations bill. It was over $200 million more than last year’s bill and almost $100 million more than the President’s budget request. It, too, was laden with numerous unrequested, unauthorized earmarks, added at the direction of members of the Appropriations Committee and the Senate. Rest assured we will see more earmarks in the other appropriations bills that come to the floor later this year.
Even the pending Fiscal Year 2010 National Defense Authorization bill is not insulated from the practice. When Senator Levin and I introduced the bill last week, I said that it contained certain provisions that I simply cannot support. Among them are approximately $6.4 billion in earmarks that were not in the President’s budget request.
Americans all over this country are hurting. People are losing their jobs, their savings, and their homes. So, what does Congress do? We continue this disgraceful earmarking process, elevating parochialism and patronage politics over the true needs and welfare of this nation.
The President pledged during his campaign that he would work to eliminate earmarks; the Speaker of the House promised to drain the swamp. Given the abysmal state of our economy, Americans can no longer wait for them to make good on their promises. Earmark reform is needed, and it is needed now.
