Winks, Nods &Amp; Corporate Cash

In Washington, lobbyist Ed Gillespie is known for his big-dollar clients--he was a $700,000-a-year consultant to Enron--and his tight relationship with the Bush White House. So when Gillespie started calling the leaders of conservative interest groups last spring, asking them to join an independent advocacy group to promote the president's energy plan, they figured Gillespie was discreetly doing the White House's bidding. "Administration officials generally don't ask for support directly," says American Conservative Union president David Keene. "It's more a wink and a nod. Everyone knows Ed is close to them, so a wink and a nod is all it takes."

Gillespie named his new group the 21st Century Energy Project. At the time, it didn't get much notice. But now, with lawyers and lobbyists in the capital scrambling to find ways around tough new restrictions on corporate campaign contributions, Gillespie's innovative project may become a widely copied example of a legal way to keep the dollars flowing.

There was nothing unusual about the project's mission. The group briefly ran TV, radio and print ads attacking "liberal elites" who were trying to depict Bush as a tool of his "Big Oil buddies," as Gillespie put it in a memo to colleagues. One ad pictured Carter-era gas lines under the headline remember the '70s? In a May press conference launching the group, Gillespie said the money came from contributions from the project's 10 members, which included Keene's American Conservative Union and the United Seniors Association. And that's where things get interesting. When NEWSWEEK called the fund's members and asked how much money they'd put up, eight of the 10 said they'd given no money at all: Gillespie had asked only for their support, not their cash.

In fact, NEWSWEEK has learned, the coalition was funded entirely by Gillespie's corporate lobbying clients. One of the firms that chipped in was Enron, which stood to gain from Bush's pro-energy agenda. Sources tell NEWSWEEK the now bankrupt energy company gave more than $50,000 to the project, secretly routing the money through one of its members, Americans for Tax Reform, a conservative interest group run by activist Grover Norquist. (Asked about Enron, Norquist replied: "We don't disclose our donors.") Another contributor: Daimler-Chrysler, which hired Gillespie to lobby against stricter fuel-economy standards. The automaker gave $50,000 to Gillespie's project, steering the money through Citizens for a Sound Economy, a conservative think tank.

The White House says it was "notified" in advance about Gillespie's ad campaign. But spokesman Dan Bartlett said, "They never gave us any details on what the financing was." Gillespie says he did nothing improper. "I felt strongly that environmental groups were stripping the bark off our guys," he said. "This was straight-forward issue advocacy."

They certainly weren't illegal. Ads like these, produced by political pros and funded by undisclosed interest groups, have been catching on. GOP consultant Scott Reed's American Taxpayers Alliance spent $1.8 million last year on ads ripping into California's Democratic governor, Gray Davis. The money came entirely from two power companies, Reliant Energy and Duke Power. The Sierra Club and other groups have spent millions attacking Bush as an enemy of the environment.

Now corporations, facing a ban on gifts to the parties, will try to shape the debate with a blizzard of thinly veiled "issue ads." Consultants, who earn big commissions on the ads, are pushing them hard. "Every political operative who wants to make a buck is going to start creating these independent committees," says one--making Ed Gillespie's once obscure project the new playbook for an old industry.