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Congressman made personal loan to bank president shortly before bank extended him $250,000-plus loan

John Byrne
Published: January 18, 2006

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CannonDenies loan was a bribe; President says he recused himself from decision

Utah congressman Chris Cannon loaned nearly $200,000 to the president of a Nebraska bank who extended at least $250,000 in credit the following year to the representative's business venture in the state, RAW STORY has found.

Cannon's office confirmed that the congressman had extended a loan of between $50,000 and $200,000 to First National Bank of Gordon, Nebraska president Gary Ruse in September 1996. The following year, the Utah Republican's kosher beef-packing plant, Premium Beef, received a $250,000 to $500,000 loan from Ruse's bank.

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A person familiar with the transaction asserts that Cannon's personal loan to Ruse was intended to ensure that he received a loan for his troubled beef-packing plant.

Cannon's office rejects the charge. A spokesman said that Ruse recused himself from the loan decision, and called any accusations of bribery "absurd."

"It was a loan of a personal nature," Cannon spokesman Charles Isom said of the congressman's loan to Ruse. "It's absurd to think the insinuation there being that the loan was made as a bribe."

Cannon's office declined to provide specific information about the amount of the loans beyond the congressman's personal campaign finance reports. Isom said Ruse made a payment on the loan in late 1996, though the amount outstanding has not changed since it was made, according to Cannon's latest reports. His office said the loan has not been repaid, though efforts had been made to collect it.

Ruse, who has left First National Bank, also said that he did not take part in the loan decision. Calls placed to First National were not returned.

"Mr. Cannon's loans were made by the board of directors," Ruse said Monday. "I recused myself from that."

He declined to comment further, saying, "What banking relationships [I have] are strictly confidential and cannot be shared."

Cannon collected between $200 and $2,000 in interest on Ruse's loan in 2000 and 2001. He did not collect interest in 2002 or 2003 and has not otherwise received interest payments, according to his personal filings.

Cannon's office stressed that the congressman had made efforts to collect the loan and that Ruse paid back some of the principal in November 1996.

"There was a repayment on the loan before it was brought to the committee extending the loan at the bank," Isom said.

Melanie Sloan, director of the Washington-based ethics watchdog Citizens for Responsibility and Ethics in Washington, said the loan's discovery merits a grand jury investigation.

"The circumstances surrounding Representative Cannon's loan to Mr. Ruse are worthy of a grand jury investigation," Sloan remarked. "The question is whether the money was an actual loan or a bribe. The fact that the loan has not been repaid and that Representative Cannon has collected only minimal interest on the loan suggest the latter, but that's what an investigation can uncover."

"This process was fully disclosed and out in the open," Isom replied. "Ruse did make a payment, which is exactly what you do with a loan."

The individual who alerted RAW STORY to the loan believes Cannon's and Ruse's responses don't hold water.

"Here you have a gentleman who's pursuing a federally backed loan, a Small Business Administration loan for one of his companies, and who makes a loan to a person who at the very least would have some influence on the loan," this person said.

Isom disagrees.

"It was a decision made by the bank independent of Mr. Ruse, as we've repeatedly pointed out," he said. "It was an open process, fully disclosed, despite this unfounded -- and false -- accusation."

Premium Beef went under in 2000. In 2003, Ruse appeared in an Associated Press article as a bank spokesperson confirming the sale of Premium Beef to an orthodox Jewish sect. Strictly from the article, it's unclear what role Ruse played in the sale.

In the article, Ruse declined to disclose the sale price. It had been assessed at $260,653.

Cannon haunted by former aide, an Abramoff colleague

The Gordon National Bank transaction isn't the only ethical concern in the 55-year-old congressman's history.

Last September, RAW STORY revealed that Cannon's former chief of staff, David Safavian, continued to advocate on behalf of his previous lobbying clients while working in Congress. The site also reported that Cannon continued to pay Safavian's former lobbying firm after Safavian joined the congressman's staff.

After leaving Cannon, Safavian was appointed by President Bush as chief of staff to the Office of Management and Budget, which handles $300 billion in federal procurement contracts. In September, he was arrested and charged with obstructing a federal investigation into fallen lobbyist Jack Abramoff. Abramoff and Safavian worked together as lobbyists in the late 1990s.

Cannon's spokesman offered tempered support of Safavian. "The congressman considers him a friend but he's not above the law," Isom said.

Safavian, a longtime gambling lobbyist, appears to have partnered with Cannon to aid former clients. As Cannon's top legislative aide, Safavian set the stage for his erstwhile clients' ultimate victory: the death of two bills that would have likely cost the Internet gaming industry hundreds of millions of dollars.

On May 14, 2002, Congressman Cannon introduced an amendment to an anti-gambling bill, a move which ultimately resulted in the measure being shelved. Two days later, Safavian was appointed chief of staff to the General Services Administration.

Ostensibly, Cannon's amendment toughened the bill by removing exemptions for horse and dog betting. But in reality it was a torpedo: Many House members represented areas with extensive horse-betting, including Speaker of the House Dennis Hastert (R-IL). If the bill reached the floor, it would probably die.

The bill -- and a competing bill -- failed as the summer waned. Though Safavian had departed, there's little doubt he had a hand in crafting the amendment: He told his alumni magazine he managed the "minutiae of the legislative process," and he'd earlier told the Register he acted as a "lobbyist" in his position as chief of staff.

That August, Abramoff's team and his ex-lieutenants celebrated. They'd thwarted yet another anti-gambling bill -- the first was smothered in 2000 -- and they alighted on a chartered jet to the famed St. Andrew's golfing range in Scotland.

Among those who boarded the plane were Abramoff, Rep. Robert Ney (R-OH), former Christian Coalition chief Ralph Reed and Safavian.

Safavian told the Washington Post he'd paid back $3,100 for his expenses, saying the trip was "primarily for golfing," and "had no business orientation." It later emerged the trip had been underwritten by the Choctaw Indians. The Choctaws were an Abramoff client -- and a former client of Safavian's.

The Choctaws cut two thousand-dollar checks to Cannon's campaign in the months before he introduced the amendment, which one Republican would later dub a "poison pill."

Cannon was a keystone in attempts to stonewall anti-gambling legislation. In order to bypass Cannon's amendment, Internet gambling foes had to propose another bill--but without criminal sanctions. This kept the bill from the Judiciary Committee, where Cannon kept throwing in a wrench. Internet gambling remains an unpoliced, multi-billion dollar business.

Along with the Viejas and the Choctaws, Cannon also enjoyed donations from various other Abramoff clients in the run-up to the bills, including the Agua Caliente, the Saginaw Chippewa and the Tiguas. He also cashed checks from the Morongo Band of Mission Indians and the Mashantucket Pequot tribe. Since the bills were snuffed, Cannon has also received additional money from three Abramoff-registered tribes.

Cannon's office asserted the donations are simply part of a political reality, saying the congressman and the tribes were on the same side of the bill.

"They had an interest in beating back the bill as did Congressman Cannon," Isom averred. "It's a case of politics makes strange bedfellows."

Cannon returned $2,000 in donations he received from Abramoff earlier this month. He opted not to return money he received from Abramoff's tribes.

A 2003 article said Cannon had received $33,850 in contributions since 2001 from tribes, gambling lobbyists and other opponents of the gambling legislation.

Former Safavian clients also got face time from the congressman. In 2001 and 2002, Cannon received $3,000 in donations from the California-based Viejas Tribe, a former Safavian client.

Though pennies in the Washington lobbying landscape, the donations ensured a voice in Congress. Cannon took the tribe's side during a hearing over the location of a casino -- for a tribe that wasn't even in his state.

Executives for the online filesharing service Napster, also former Safavian clients, had their photographs taken with the congressman and Safavian in 2001. Cannon also introduced the "Music Online Competition Act," which sought to ease laws stifling the online music business.

In his subsequent campaign cycles, Cannon pocketed $3,000 from Napster's General Counsel and $500 from Napster co-founder Shawn Fanning. Fanning was front and center in the 2001 photograph with Safavian.

Safavian was charged in September with obstruction of justice. His lawyer, Barbara Van Gelder, says the charges were "rigged."

Clarification: The bank referenced in this article is First National Bank of Gordon, Nebraska.



 


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