Republicans Stalled Funding Probe, but Case Won’t Advance

WASHINGTON — The Republican Party waged a secret battle to withhold documents from a Justice Department fund-raising investigation of its former chairman and won a court ruling Friday that will keep the materials from a grand jury.

Though the GOP has accused Democrats of stonewalling the fund-raising investigation, an appeals court ruling disclosed that Republicans have held up the prosecutors’ investigation of former party Chairman Haley Barbour.

A grand jury in 1997 subpoenaed the files of the Republican National Committee’s former general counsel, seeking information on efforts by Barbour and others to arrange a loan guarantee from a Hong Kong businessman to help their efforts in the final days of the 1994 election.

Democrats have alleged the transaction funneled illegal foreign money into the U.S. election. Barbour has said he didn’t know the Hong Kong businessman used foreign funds.

The former RNC general counsel argued the documents were protected by attorney-client privilege, but a judge ordered him to turn them over under the crime-fraud exception to attorney-client privilege. After reviewing the documents, the judge concluded there was evidence of a crime.

An appeals court, however, sided with the Republicans.

The three-judge panel said the loan guarantee Barbour arranged didn’t violate federal campaign finance laws and could not be used to pierce the client confidentiality.

“This case does not fall within the crime-fraud exception because what RNC and its officials are accused of is not criminal,” the judges ruled.

RNC Chairman Jim Nicholson said, “Haley and the RNC were well within the limits of the law,” contrasting their conduct with that of “Democrats with close ties to Al Gore” who have been “convicted of felonies.”

Nicholson said Democratic National Committee officials have been making “false charges . . . about Mr. Barbour and the RNC” and should apologize.

Democratic National Committee spokesman Rick Hess said “this three-year legal battle by the Republicans shows that they will go to any lengths and employ any tortured legalism to conceal the foreign source of their funds.”

At issue is a transaction between the National Policy Forum, a group formed by Barbour, and Hong Kong businessman Ambrous Young.

Prior to the 1994 election, NPF had received a loan from Republican political committees. As the election drew closer, Barbour wanted to inject money into the GOP effort to gain control of Congress and sought a way to have NPF repay the money it was loaned so the GOP committee could use it to help candidates.

Barbour arranged a $2.1-million loan guarantee from Young, used that to secure a U.S. bank loan and paid back the money to the GOP committee in time for them to use it for the election.